Population data to reveal 'scary' levels of housebuilding required

Cairn Homes boss warns census figures will show need for sharp upwards revision of 35,000-40,000 estimates for home demand

Cairn Homes CEO Michael Stanley said that  building costs, though 'sticky', are easing substantially. 

The boss of Cairn Homes — one of the largest housebuilders in the State — has warned that soon-to-be published census data will likely reveal that even more houses will be required to meet booming housing demand in future years.    

Chief executive Michael Stanley said current estimates that 35,000 to 40,000 new homes would need to be built each year in order for housing supply to start to ease the housing crisis will likely need to be revised sharply higher. The full census data could point to "some scary figures" for population and housebuilding targets, he said.  

Around 30,000 new homes are currently being built in the Republic of Ireland, which experts say is far short of requirements.             

Speaking to reporters at the company's annual meeting, Mr Stanley said there were signs that price pressures which were driving building costs higher were easing substantially, but only after €50,000 had been added to the costs of building a first-time-buyer starter home, in the last two years. 

Building costs which soared 12% last year have since slowed to 4% or by €10,000 per unit, and although "quite stubbornly sticky" will likely ease further in 2024, Mr Stanley said. 

Building-cost inflation, which had been driven in particular by the rising global product costs had not fully been passed onto buyers. That meant the least expensive first-time buyer duplex home cost Cairn Homes up to €325,000  to build, up from €275,000 following two years of costs inflation, the company said.  

Mr Stanley said Government initiatives to reduce levies and connection costs were keeping a lid on prices, but challenges remained despite land costs having fallen in recent years.  Cairn Homes supported proposed changes to the planning system but the way they were implemented was key, he said.

Affordable homes          

Meanwhile, the State owns too few social and affordable homes, but the new mortgage lending rules, along with other incentives for buyers, were working "effectively", Mr Stanley said.    

Cairn Homes shares have risen strongly, by 24%, since the start of the year, but are up only 4% from a year ago, valuing the housebuilder at €731m. At the shareholder meeting, small shareholder Phil Duggan from Cork questioned the reasons for the share-price performance.        

Speaking to reporters, Mr Stanley said most of the shares in Cairn Homes were held by international investors who are exposed to the US and the UK economy and its housing market, in particular. 

That in turn influences perceptions of the Irish market, despite the much stronger performance of the economy here, he said.