Mild improvement in building completions

Posted On Friday, 18 November 2011 02:00 Published by eProp Commercial Property News
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The third quarter has shown mild improvement on the previous quarter in terms of the growth in building completions.

 

John LoosHowever, the volatile nature of building plans passed provides no clear indication on whether this improving trend will be sustained according to FNB's property barometer.

John Loos, household and property sector strategist said that after a tough few years, third quarter building completions had recently been seeing some mildly positive year-on-year growth. In terms of the number of homes completed, the year-on-year growth for the quarter was +6.9%, up from 0.8% in the previous quarter. In terms of square metres completed, the growth rate was a more moderate +2.5%, up from a -2.3% decline in the previous quarter, reflecting a decline in the average size of home completed.

However, despite some mild growth, the level of building completions remained a shadow of its boom time glory. At 1.263 million square metres completed for the third quarter, the level of completion remained at 46.7% of the peak level reached in the final quarter of 2005. Activity also remained well-below the long term trend level since 1994, as the correction, in response to an oversupplied existing home market, continues.

Loos said that despite some improvement in completions, the growth rate in building plans passed had been highly erratic in recent times, spiking in the first quarter at year-on-year growth of 40.2%, before retreating to a mild decline of -1% year on year in the third quarter in terms of square metreage. Given that plans passed can serve as a leading indicator of future building activity, it could thus be said that the building sector currently had no strong direction, which was probably reflective of an economy and housing market which also had no strong direction at present.

Last modified on Tuesday, 11 March 2014 08:32

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