Residential building statistics shows contracting construction phase in the first four months of 2018

Posted On Thursday, 21 June 2018 16:37 Published by
Rate this item
(0 votes)

Residential building activity in the planning phase improved, with the construction phase contracting in the first four months of 2018.

Jacques_Du_Toit_Absa_Hoam_Loans

Based on data published by Statistics South Africa in respect of building activity related to new private sector-financed housing (see explanatory note), the first four months of 2018 showed levels of activity in the planning phase (the number of building plans approved by local government institutions) growing on a year-on-year basis, with the construction phase (the number of housing units reported as completed) contracting compared with a year ago.

The number of building plans approved for new housing increased by 18,8% year-on-year (y/y), or 3 079 plans, to 19 423 plans in the period January to April this year, with this growth mainly driven by the segments for houses smaller than 80m² and flats and townhouses, which showed combined growth of more than 25% y/y in the 4-month period. 

New housing units reported as being completed dropped by 22,7% y/y, or 3 062 units, to a total of 10 440 units in the first four months of the year. As in the case of the planning phase, the segments of houses smaller than 80m² and flats and townhouses were mainly responsible for a combined contraction of 29% y/y in the period January to April.

The average building cost of new housing completed increased by 5,5% y/y to R7 437 per square meter in the first four months of 2018, compared with R7 049 per square meter a year ago. In real terms, i.e. after adjustment for inflation, residential building costs were up by 1,3% y/y in the 4month period, based on an average headline consumer price inflation rate of 4,2% y/y.

Building activity with regard to alterations and additions to existing houses remained under pressure, with both the building area approved and the building area reported as completed contracting marginally year-on-year in January to April. The building cost of completed alterations and additions to existing houses increased by 17,1% y/y to R7 196 per square meter in the 4-month period compared with R6 148 per square meter a year ago, with these building costs rising by 12,3% y/y in real terms, i.e. after adjustment for the effect of inflation. 

Building confidence remained on a downward trend up to mid-year after declining in the second quarter of the year to its lowest level since the third quarter of 2012. This came against the background of a contraction in the economy in the first quarter of 2018, continued financial pressure experienced by the household sector and uncertainty regarding the land reform process. In view of these developments and expectations of inflation rising to above 5% y/y in the second half of the year and continued relatively low economic growth this year, levels of residential building activity are forecast to remain largely in line with those of the past few years.

The average building cost per square meter in the three categories of new housing was as follows in January to April 2018:

  • Houses of <80m²: R5 485, up by 15,5% y/y.
  • Houses of ≥80m²: R7 387, up by 4,5% y/y.
  • Flats and townhouses: R7 437, down by 0,8% y/y.

 

Last modified on Friday, 22 June 2018 05:33

Most Popular

Stable repo rate a boost for first-time home buyers says Dr Andrew Golding

Sep 20, 2018
Andrew Golding
With the rand regaining some ground and inflation surprising on the downside this week,…

SARB keeps Repo rate unchanged

Sep 20, 2018
Consumers will breathe a sigh of relief after the South African Reserve Bank’s (SARB)…

Green Building Convention Brings Built Environment and Sustainability Heavyweights to SA in a Race to Zero

Sep 29, 2018
GREEN BUILDING COUNCIL 1
The Green Building Council of South Africa (GBCSA) will host the 11th Annual Green…

ALP opens warehousing park 75% pre-leased, topping all other real estate segments

Sep 24, 2018
TOBY SELMAN
Africa Logistics Properties has today launched its first 49,000 sqm of modern grade –A…

Sub-Saharan Africa on a path to greater real estate transparency but progress is patchy

Sep 24, 2018
JEREMY KELLY
JLL & LaSalle’s Global Real Estate Transparency Index highlights urgent need for further…

Please publish modules in offcanvas position.