Home builder Cairn Homes has said that build cost inflation was significant during 2022 with the cost of building its homes increasing by about €20,000 per new unit.
In a trading update for the year to the end of December, Cairn Homes said that inflation persisted into the second half of 2022 - but at more moderate levels.
"The cost of building new homes in Ireland therefore remains significantly elevated compared to two years ago with our build costs having increased by about €35,000 per new home in this period," the company said.
In today's trading update, Cairn Homes said that it closed 1,526 new home sales in 2022, up from 1,120 the previous year.
It was active on over 20 sites nationwide during the year.
Cairn also said it generated core housebuilding revenue of about €610m, an increase from €419m in 2021.
With this level of performance, Cairn Homes said it is comfortable with its existing 2022 profitability guidance of 21.5% gross margin, €100m operating profit and a 16.5% operating margin.
It said its performance was supported by strong levels of demand from first time buyers, many of whom are now able to avail of Government supports, including the recently launched First Home shared equity scheme.
"Considering the level of embedded build cost inflation throughout the last two years coupled with significant interest rate increases, many of these customers would not otherwise be able to access new homes," it added.
In 2022, Cairn was one of the largest providers of new social and affordable housing in Ireland as it delivered almost 500 A-rated homes, including a substantial number of apartments in its larger developments.
It said it will continue to use its scale and capacity to create value for the State and we will increase its delivery to over 800 new social and affordable homes nationwide in 2023.
It was also granted approval for its new "masterplan" for its Montrose site in Donnybrook, including 688 apartments and a 192 bedroom hotel, during 2022.
Cairn said it is starting 2023 with its largest ever forward sales pipeline of over 1,100 new homes and said it was confident of making further financial progress in the year ahead.
Michael Stanley, Cairn Homes' chief executive, said the company was proud to have become the first company in Ireland to deliver over 1,500 new homes in a calendar year.
"This included a broad mix of first time buyer houses and duplexes, houses and apartments for second time buyers, and apartments for the private and affordable rental markets," he said,
Mr Stanley said that looking at the wider market, Ireland has increased its working population by 500,000 to over 2.5 million people in the last six years.
"Supply of new residential accommodation in response to this successful economic period has seen a significant increase in the number of lower density houses completed in suburban and regional areas. This well supported bias or misjudged focus means that new apartment developments close to any areas of high employment or multimodal transport links remain virtually non-existent," the CEO said.
Mr Stanley noted that there are over 80,000 planned apartments in the pipeline, all of which meet new design and size standards.
"While many have been held up by our planning system or objections, nearly one third have full planning permission and should be under construction. Viability and funding remain challenging, however, our industry has the capacity to deliver, and working collaboratively with Government support, can address this damaging supply imbalance. Ireland's sustainable social, environmental and economic future depends on it," he added.
Shares in Cairn Homes rose in Dublin trade today.
