Lack of housing for young people ‘destroying our economy’ - Cairn Homes chief

The Irish economy is being “destroyed” by a lack of housing, the chief executive of Cairn Homes has claimed.

Michael Stanley said young people were increasingly being forced to leave the State because of housing shortages while the economy was missing out on vital investment because employers cannot find homes for their staff.

He said home ownership rates among 25-39-year-olds, once considered a prime homeowning age, had dwindled to just 7 per cent. “We are an affluent society [but] this feels like the mid-80s when people were leaving here because we had no work ... these kids are leaving because there is no housing,” Mr Stanley said.

“We have to wake up and realise this ... we are destroying our economy because of our housing shortage for young people.” Of the near 33,000 homes built last year, just 6,000 were bought by young people, first-time buyers, he said.

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Speaking as the company announced record revenue of €667 million for last year on the back of “exceptionally” strong demand, Mr Stanley said a problem for the industry was “scale”.

A recent report by Goodbody Stockbrokers indicated the industry here comprised largely of smaller builders with limited capacity.

If the Government are prepared through AHBs (approved housing bodies) or the LDA (Land Development Agency) to support private housebuilders through funding support “that’s a win-win for both sides”, Mr Stanley said, suggesting the industry had the capacity to scale up and build 50,000 homes a year, a figure that analysts say is needed to meet structural demand.

“We’re getting hung up on the amount of support the State is giving to the lucky lotto winners [those availing of the Government’s Help to Buy scheme] ... the 5,000 or 6,000 a year,” when the problem is much bigger, he said.

One of the immediate problems is that “we will get no international capital into Ireland over the few years to build rental properties ... it’s gone,” Mr Stanley said, referring to the fall-off in private rented sector (PRS) investment on foot of higher interest rates, which has reduced returns for investors.

The company earlier reported its strongest ever financial and operational performance last year, with 1,741 sales completions generating revenues of €666.8 million, an 8 per cent rise on 2022. The second half of the year was stronger, Cairn said, with 1,206 sales completions and total revenue of €447.3 million.

Cairn said it invested €439.9 million in construction work in progress during the year, and the number of home commencements rose more than 20 per cent to 2,100. That included the company’s first passive house apartment scheme in Charlestown, which comprises 598 units.

[ Young Irish ‘failing to launch adult lives’: 68% of people in late 20s still living with parents ]

“Construction of homes for first time buyers is a core market for us, having delivered over 500 new starter homes at average competitive market prices of just under €400,000 last year,” Mr Stanley said.

Demand for its properties remained high, the company said, with a pipeline of closed and forward sales growing by almost 1,000 more in 12 months.

“Our sustained positive momentum has carried through into 2024 and strong sales since the beginning of the year has seen our closed and forward order book growing further to 2,473 new homes. We continue to invest heavily in work in progress as we ramp up delivery across our 20 active construction sites,” said Mr Stanley. “Cairn will deliver another year of strong growth in volumes, revenue and profitability.”

[ First-time buyers: The supports that can help the ‘locked-out generation’ buy their own home ]

The builder said it was targeting growth of 30 per cent this year, with 2,200 units and operating profit of around €145 million. Significant cash generation expected this year will continue to fund consistent shareholder returns, the company said.

Cairn is more than three quarters through its €75 million share buyback programme, with 45.6 million shares acquired for €52.4 million.

A final dividend of 3.2 cent is bring proposed for 2023, bringing the total to 6.3 cent per share.

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