A house at Clonakilty, Cork, by Niall McLaughlin Architects, has won the Stephen Lawrence Prize sponsored by the Marco Goldschmied Foundation. The announcement was made tonight at a special awards ceremony for The RIBA Stirling Prize in association with The Architects' Journal at the Royal Museum in Edinburgh.

Located in a small harbour looking north east across Dirk Bay and sheltered by Dundeady headland on the west coast of Ireland in County Cork, an 18th century cottage and a small complex of buildings associated with the boat slip for the old coastguard's station provided the basis for a new structure matching the natural beauty of the coastline.

The Stephen Lawrence Prize sponsored by the Marco Goldschmied Foundation rewards the best example of a building with a construction budget of less than £500,000. This is the eighth year that the award, named in memory of the murdered black teenager who planned to become an architect, has been given.

Marco Goldschmied, Past President of the RIBA, and Doreen Lawrence presented Niall McLaughlin with a cheque for £5,000.

The Stephen Lawrence judges – Marco Goldschmied, Doreen Lawrence and David Taylor – had this to say: "This stylish and accomplished private house extension is a worthy winner of this year's award in a strong field. The architect has exceeded the clients' expectations, delivering an intelligent and spacious project which maximises light and connects and enhances the existing 18th and 19th century stone buildings on this stunning former coastguard site.

"It is also a testament to Niall McLaughlin's thoughtful skill and vision that the entire scheme sits naturally in its striking setting, avoids cliché, and successfully frames a series of delightful views with panache and élan. Ultimately, this is a housing project of enviable stature and a worthy yet subtle addition to a ruggedly beautiful – but unforgiving – coastal site."