Cairn Homes has today forecast total build cost inflation for fiscal 2022 to be about 6%-7%, pressured by rising materials and labour prices, although the home builder reaffirmed its annual outlook.
Cairn said it saw the strongest-ever sales period for the six months ending June 30, selling over 750 new homes for more than €295m.
The house builder said that momentum in the construction sector has been very strong since the end of the second lockdown in May 2021 and the company has closed 1,264 new home sales in the last 12 months.
In a trading update for the six months to the end of June, Cairn said it closed 547 new home sales and generated total core revenue of about €240m.
This compares to 403 sales and €131m in revenue the same time last year.
The company said it expects total build cost inflation for the full year to add about €15,000 to €17,500 per unit across labour and materials based on its experiences in the first half of the year and anticipated second half pricing levels.
"We are working closely with our supply chain partners and implementing our procurement strategic initiatives to guarantee the competitive supply of both labour and materials," the company said.
But it added that build cost increases are being fully offset by improving product mix, operational efficiencies, and stronger pricing with a full year 21.5% gross margin guidance for 2022 maintained.
Homebuilders across Europe have been facing challenges of higher costs, particularly in key materials such as steel and timber, since the start of the Ukraine crisis earlier this year.
Cairn also said it had started five new sites in the six month period in Dublin, Kildare, Meath and Limerick and the company is now active on 20 development sites around the country.
It expects to start up to five new sites in the second half of the year, including its largest development in Clonburris which will be a significant contributor to Cairn's continued volume growth.
Looking ahead, the company said it expects to deliver up to 5,500 new homes in the three years to the end of 2024.
Michael Stanley, Cairn's chief executive, said the company's continued reinvestment in increased new homes output remains its core strategy.
"Our current performance and profitability in a challenging environment has allowed us to commence a significant number of new developments. Today, we are building in 20 separate locations nationally with 1,750 closed and forward sold new homes across these developments," Mr Stanley said.
The Cairn CEO said the standard and quality of new homes being built in Ireland today is appropriately high.
"However, rising material costs have further stretched the affordability gap for the current generation of homebuyers. In the present environment, new homes output would materially reduce without the sensible Government interventions for first time buyers, including the First Homes initiative and Croí Cónaithe," he added.
Shares in the company ended higher in Dublin trade today.