Thursday, 18 May 2017 16:32

Subdued levels of residential building activity in the first quarter of 2017

Written by
Rate this item
(0 votes)

 Residential building activity remained under pressure in both the planning and construction phases of the South African market for new housing in the first quarter of 2017.

Jacques_Du_Toit_Absa_Hoam_Loans

The number of plans approved declined from a year ago whereas the number of housing units reported as completed showed single-digit growth. These developments are based on data published by Statistics South Africa in respect of building activity related to private sector-financed housing (see explanatory notes).  

The number of new residential building plans approved contracted by 4,0% year-on-year (y/y), or 542 plans, to 13 064 plans in the first quarter of the year from13 606 plans approved a year ago. This decline in plans approved was driven by the two categories of houses, which showed a combined contraction of 14,3% y/y, or 1 227 plans, to a total of 7 359 plans, whereas the segment for flats and townhouses recorded growth in plans approved of 13,7% y/y, or 688 plans, in the first quarter.  

Year-on-year growth in the number of new housing units built came to 9,4% y/y in the period January to March 2017. The segment for flats and townhouses showed strong growth of 29,2% y/y, or 1 023 units, with the volume of smaller-sized houses constructed, i.e. those with a building area of less than 80m², increasing by 9,4% y/y to 3 385 units over the 3-month period. The segment for houses equal to or larger than 80m² contracted by 16,6% y/y to 2 225 units.  

The real value of plans approved for new residential buildings declined by 7,9% y/y, or R928,94 million, to R10,78 billion in the first quarter of 2017, with the real value of new residential buildings reported as completed rising by 15,7% y/y, or R1,09 billion, to R8,02 billion in the quarter. These real values are calculated at constant 2015 prices.  

Levels of building activity with regard to additions and alterations to existing houses were also much subdued in the first quarter of the year, with the building area for which plans were approved contracting by 4,9% y/y and the building area reported as completed showing virtually unchanged from a year ago.    

The average cost of new housing built increased by 11,3% y/y to an average of R7 139 per square meter in the first quarter of the year compared with R6  415 per square meter a year ago. This was well above the average headline consumer price inflation rate of 6,3% y/y over the same period. The average level of and the increase in building cost per square meter with regard to the three categories of housing was as follows in January to March 2017: • Houses of <80m²: R4 979, up by 19,2% y/y • Houses of ≥80m²: R7 123, up by 10,0% y/y • Flats and townhouses: R8 023, up by 8,7% y/y  

With the South African economy forecast to grow by only 1,0% in 2017 and the household sector set to continue to experience a fair amount of financial strain this year, which will contribute to further low consumer confidence, residential building activity does not seem to show a significant improvement in the rest of the year.     

Last modified on Friday, 19 May 2017 16:40

Most Popular

From building houses to building futures: It’s time to take affordable housing in SA to the next level

Jun 22, 2017
Leanne Govender
There can be no arguing against the fact that the provision of affordable housing is a…

Redefine Properties sells Delta stake to women-led BEE consortium

Jul 04, 2017
Phumzile Langeni
JSE-listed diversified real estate investment trust Redefine Properties has sold its…

Vukile acquires R2,8bn Spanish retail portfolio, boosting its offshore exposure to 21%

Jul 04, 2017
Parque Oeste -Alcorcon
Vukile Property Fund announced its trailblazing acquisition of a portfolio of nine…

Substantial development for Salt River's Brickfield Road

Jun 27, 2017
13 Brickfield
Pockets of Salt River, once a booming part of Cape Town due to its proximity to the CBD,…

Bridge City's bold affordable housing vision becomes reality

Jul 04, 2017
Bridge City Affordable Housing
Construction of a landmark affordable housing project at Bridge City is due to start…