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Starter homes ‘will soon be out of reach for first-time buyers’, says CEO of largest residential developer

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Cairn Homes executive Michael Stanley

Cairn Homes executive Michael Stanley

Cairn Homes executive Michael Stanley

Some first-time buyers could soon be priced out of the housing market by rocketing building costs, according to the CEO of Ireland’s largest residential developer.

Cairn Homes chief executive Michael Stanley said the housebuilder was currently able to absorb massive increases in the cost of building a starter home, but its capacity to hold off on increasing prices was not limitless.

“If build cost moves up too much, we won’t be able to find customers who can afford our starter homes,” he said.

“There is no super-normal profit there to absorb the cost increases. Eventually it will wind up in the price.”

The company said cost inflation per unit was €15,000 last year and would be another €10,000 in 2022.

Mr Stanley said the price of a Cairn starter home rose by just €2,000 annually as the company invested in construction efficiency to maintain its margins.

Cairn more than doubled its operating profit in 2021 to €58.4m as the housing market roared back to life after a pandemic-disrupted 2020.

The company said it was paying a dividend of about €40m this year and starting a share buyback programme to return €75m to shareholders.

As a 2.88pc shareholder himself, Mr Stanley stands to earn more than €3.3m from those distributions.

Chair Alan McIntosh and his wife can expect to receive nearly €6.2m for their 5.36pc stake in the company.

Cairn sold 1,120 new homes and recorded its strongest six month period of sales in the second half of the year.

Mr Stanley estimated that 30,000 new homes would be delivered across the Irish property market this year as stalled developments came back on stream, but said he doubted that level of output was sustainable.

He said that a “planning logjam” and increased costs would cap output after 2022.


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