Marginal improvement in residential building activity up to July

Posted On Thursday, 21 September 2017 23:16 Published by
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Building activity in the South African market for new private sector-financed housing showed some marginal improvement on a year-on-year basis in both the planning and construction phases in the first seven months of 2017, based on data released by Statistics South Africa.

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The number of building plans approved for new housing increased by 1,8% year-on-year (y/y), or 594 plans, to a total of 32 857 plans over the 7-month period up to July this year. Plans approved for new houses smaller than 80m² increased by 11,2% y/y since January, but the number of plans approved for houses equal to or larger than 80m² dropped by 7,3% y/y, whereas the flat and townhouse segment showed negligible growth of only 0,8% y/y since the start of the year. 

In the construction phase the number of new housing units reported as being completed showed little growth of only 1,2% y/y, or just 261 units, in January to July this year. The segment for houses of 80m² and larger showed a contraction of almost 19% y/y, or 1 305 units, to 5 667 units over this period. Both the segments for houses less than 80m² and flats and townhouses recorded growth of around 10% y/y in the seven months up to July.

With many homeowners experiencing a fair amount of financial strain, the building area in respect of alterations and additions to existing houses declined in both the planning and construction phases.

The average building cost of new housing increased by 9,2% y/y to an average of R7 040 per square meter in the first seven months of the year compared with R6 449 per square meter in the corresponding period last year. In real terms, i.e. after adjustment for inflation, building costs increased by 3,5% y/y, based on consumer price inflation that averaged 5,5% y/y over the 7month period. The average building cost per square meter in the three categories of new housing was as follows in January to July:

•     Houses of <80m²: R4 714, up by 11,2% y/y

     Houses of ≥80m²: R7 113, up by 8,9% y/y

•     Flats and townhouses: R8 161, up by 9,3% y/y

The forecast is for growth in residential building activity to remain largely subdued up to year-end due to trends in and the outlook for the economy, household finances, consumer confidence and building confidence. 

Last modified on Friday, 22 September 2017 06:06

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