Cairn Homes boss warns supply will suffer as housing starts to slow

Ireland’s largest homebuilder Cairn Homes had its strongest first half yet but warned the broader market was showing “serious contraction” despite rising demand.

We have experienced a significant post-Covid setback,” said Chief Executive Michael Stanley. “Despite the government’s efforts and all efforts, the feasibility of housing construction today is seriously questioned.”

He pointed to housing starts in Ireland falling by almost a fifth from March to July.

Mr Stanley said this slowdown in new starts came as “massive” demand showed no signs of slowing.

He expects around 25,000 to 26,000 new homes to be completed this year, while expecting around 22,000 to 25,000 next year.

“It takes two and a half years to build a housing estate,” he explained. “It takes about nine to twelve months to build a housing estate.”

There are currently more apartments under development than multi-family homes, he said, which will hamper completion.

However, he added, it is more difficult to predict how many one-off homes are built annually, which includes 20 to 25 percent of new homes each year.

Cost inflation of materials and labor has proven to be one of the biggest problems newcomers face, Stanley said.

Cairn has absorbed expected total construction cost inflation for the year of 7-8 per cent for infrastructure, labor and materials, equivalent to around 17,500 to 20,000 euros per unit.

Insulation is up 138 percent in two years, while transportation and shipping are up 300 percent. Timber is up 64 percent, he added.

Cairn found that customers have responded positively to government initiatives.

The First Home program has assisted buyers in five of the recent developments in Cairn.

“If something like [the First Scheme] comes, the government needs to assess its effectiveness before deciding if it’s the right action,” Stanley said.

He also referred to the Land Development Agency.

“If they can expedite the delivery of homes on state land, that’s a very good thing,” he added.

Cairn Homes had core sales of €240 million in the first half and completed 547 new home sales.

This was an increase compared to the first half of 2021, in which the company achieved sales of 130.6 million euros.

The company reported an operating profit of 36.2 million euros, an increase of 209 percent over the same period last year.

Cairn Homes has 22 active locations across the country, with construction currently underway in Limerick and Kilkenny.

The value of the construction work is now €346 million.

Demand continues to rise, with the company’s closed and forward sales pipeline now exceeding EUR 760 million.

This corresponds to 1,988 new apartments.

The average selling price for a starter home is now €330,000, up €3,000 from the same point last year.

In the three years to 2024, the company expects to deliver between 5,000 and 5,500 new homes. Cairn Homes boss warns supply will suffer as housing starts to slow

Fry Electronics Team

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