Thursday, 18 August 2016 21:58

First half of 2016 saw the planning phase of new housing contracting, with the construction phase showing single-digit growth

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Building activity in the South African market for new housing showed some divergent trends in the first half of 2016.

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In the planning phase the volume of building plans approved contracted on a year-on-year basis up to June, with the number of new housing units completed recording some single-digit growth over the same period.  With regard to both the planning and construction phases of new housing, some divergent year-on-year growth occurred at a segment level in the first six months of year.

These trends are based on data published by Statistics South Africa in respect of building activity related to private sector-financed housing (see explanatory notes).  

The volume of new housing units for which building plans were approved dropped by 2,5% year-on-year (y/y), or 730 units, to 28 466 units in the first half of the year. This decline was mainly driven by the two segments of houses, which showed a combined contraction of 7% y/y, or 1 290 units, to 17 125 units over the 6-month period.

The segment of flats and townhouses, however, recorded growth of 5,2% y/y over the same period.   Year-on-year growth in the number of new housing units built came to 6,3% y/y in the period January to June 2016, with the segment for flats and townhouses showing sharp growth of 30,7% y/y over this period. This strong year-on-year growth in flats and townhouses reported as constructed in the six months to June this year might be due to a normally long lag between the planning and construction phases as a result of the extent of these housing projects.   

The real value of plans approved for new residential buildings was recorded at R24,93 billion in the first half of 2016, with the real value of new residential buildings reported as completed at R15,14 billion in the period. These real values are calculated at constant 2015 prices.  

The average cost of new housing built increased by 7,5% y/y to an average of R6 417 per square meter in the first half of the year compared with R5 967 per square meter in the corresponding period last year. The average building cost and the year-on-year percentage change per square meter in the three categories of housing were as follows in January to June 2016: • Houses of <80m²: R4 156, up by 8,5% y/y  • Houses of ≥80m²: R6 494, up by 4,2% y/y  • Flats and townhouses: R7 458, up by 8,5% y/y  

South Africa is currently experiencing tough economic conditions, impacting the household, business and residential building sectors over a wide front. Levels of confidence in these sectors of the economy have declined in the first six months of the year as a result. Residential building activity has not performed particularly well over this period and a significant improvement in building sector conditions is not expected over the short to medium term. 

Last modified on Saturday, 20 August 2016 01:11

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