Challenging market hits McInerney

Weak consumer sentiment and a lack of available mortgages led to challenging trading conditions in the UK and Ireland, house builder McInerney Holdings said today, but there is evidence of some stabilisation in the Irish market.

In a trading statment this morning, the company said the market for standard housing products in Ireland has "found a certain degree of price stability" since late 2009, but said demand still remained low. It also warned that mortgage constraints were still having an impact on the market, pointing to a significant number of house purchases that weren't completed by the end of 2009 due to lack of mortgage availability.

McInerney said "modest upward pressure" on UK house prices was only filtering through slowly to different geographic regions.

The company's main business is building and selling new homes in Ireland and Britain.

McInerney said total private and contracting residential completions for the group in Ireland, the UK and Spain fell to 756 in 2009 from 1,359 units the year before. Private house completions in Ireland fell by more than half to 131, compared to 296 in 2008. The Irish contracting business, meanwhile, completed 31 housing units in 2009, a significant fall from 306 recorded the previous year.

A total of 582 units were completed in the UK last year, down from 750 in 2008.

McInerney also said it had not yet resolved talks with banks in the UK and Ireland on revised loan structures that it announced in November.

Last year, the company said it would break certain covenants it has given to its banks, believed to relate to meeting certain sales targets, and maintaining a certain net worth relative to its liabilities.

Negotiations are taking longer than originally expected, the company said, but draft term sheets for the new banking arrangements in both Ireland and the UK are expected soon.