Housebuilder Glenveagh sees building costs rise while labour shortages ease

Glenveagh Properties called for changes to the planning system to encourage the building of houses rather than apartments on suburban sites

Glenveagh Properties CEO Stephen Garvey (left), told reporters that the costs of materials rose less than some had expected.

The boss of housebuilder Glenveagh Properties said it has faced mixed news on accelerating inflation, as building material costs rise but once-acute labour shortages have eased considerably.                

Chief executive Stephen Garvey told reporters that the costs of materials rose less than some had expected, by up to 9% in the first six months of the year, but that he was still concerned about potential shortages of building products because manufacturers on the continent could cut back output under controls over gas consumption. Material costs were rising by 6% before the Ukraine war, he said.   

He was talking after the builder posted an earnings statement that showed a pre-tax profit of €13m in the first half of the year, up 200% from a year earlier, as its revenues rose 57% to €200m. The builder had a gross margin of 16.5% in the period. 

Glenveagh, along with Cairn Homes, is one of only two homebuilders listed on the Dublin stock market.                                               

"On the positive side of inflation, and where we see inflation, we certainly see a bigger pool of available labour" as the start up of new commercial projects including the start of new office and hotel projects are put on hold, Mr Garvey said. 

He said that "labour is quite benign but unfortunately" the outlook of commodity inflation remains uncertain for next year. 

Planning system

Glenveagh again called for changes to the planning system to encourage the building of houses rather than apartments on suburban sites. The builder earlier this year had proposed to the Government that the planning system remove the requirement for apartments on sites outside of city centres. 

Mr Garvey said it was seeing "a very robust demand across the board". He said the company was looking at the possible fall-out from the cost-of-living crisis for buyers but said that its focus on selling first-time buyers' homes at around €350,000 insulated demand even if borrowing rates were to rise further. 

"Looking ahead, while the Government's First Home and Help-to-Buy schemes will provide much-needed support for homebuyers, they won't be enough to solve Ireland's accommodation crisis if planning policy and the planning system do not get the reform they need so urgently," the company said.    

However, the builder said that "despite the near-term challenges of consumer price inflation and material availability" it would deliver earnings per share of between 7.5 cent to 8.5 cent this year.