McInerney Holdings, one of the country's leading homebuilders, said that profit barely grew in the first half.

But the company expects a "favourable" result for the full year as it reaps the benefits of expansion in the UK.

Profit after tax rose just 2 per cent to €9.35 million from €9.17 million in the first six months of 2005 as finance costs increased due to higher interest rates.

The number of housing units that McInerney completed in Ireland fell to 362 from 438 a year earlier.

McInerney's managing director, Barry O'Connor, said that completions would be weighted towards the second half this year as two apartment schemes in the Dublin suburbs of Blackrock and Irishtown only went on sale in the second half of the year.

The company's pretax profit climbed 1.8 per cent to €11.21 million in the six-month period, while earnings per share, on a diluted basis, increased to 27 cent from 26.28 cent a year earlier. Sales jumped 34 per cent to €228.8 million.

"The business is performing better than the numbers show," Mr O'Connor said. An interim dividend of 10 cent was declared, compared to 9 cent a year ago.

"We're confident of having a good year." Demand for homes in Ireland "has never been stronger", buoyed by higher employment, demographics and immigration, according to Mr O'Connor.

He believes that the pace and extent of interest rate increases will not curb demand in the property market, although they may slow the rate of house price gains.

In the UK, McInerney completed 268 units in the first half, up from 142 a year earlier.

It expects completions to amount to more than 900 this year, up from 658 in 2005 in the UK, where McInerney aims to build a business as large as its Irish division.

"We've invested heavily in the UK and that investment will unwind in the second half," said Mr O'Connor. "At the end of last year, we had 2,000 plots of land ready to build on and today we have 3,000.

"We also put a number of housebuilding teams in place in England that will be capable of building 1,400 units a year. So, in the first half, we bought more land and brought in more people but did not have additional sales as a result. We will start selling and closing units from now onwards."

The company has made two acquisitions in England so far this year. McInerney agreed in early August to buy Bowey Homes in a €45 million transaction to gain a company that builds homes for owner-occupiers in the north of England.

In February, the company paid €9 million for Augusta, a builder based in the south midlands that specialises in social housing.

The company intends to grow its Irish business by 10 per cent a year compared to growth of at least 30 per cent in the UK, where there is a shortage of homes.