Growth in building plans approved, but construction phase contracted in the first seven months of 2018

Posted On Monday, 24 September 2018 12:53 Published by
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Data published by Statistics South Africa with regard to private sector-financed residential building activity (see explanatory note) showed that the planning phase of new housing improved in the first seven months of 2018, whereas the construction phase contracted.

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These diverging trends were the result of strong growth together with a significant contraction in some categories of housing in the planning and construction phases respectively. Building plans approved for new housing increased by 7,7% year-on-year (y/y), or a total of almost 2 600 plans, to 36 147 plans in January to July this year, with this growth driven by the segment of flats and townhouses, which showed growth of 20,7% y/y in the 7-month period.

The number of new housing units reported as being completed was down by 8,7% y/y, or 1 999 units, to a total of 20 900 units in the first seven months of the year. The segment of houses smaller than 80m² was the main driver of this decline, showing a drop of 30,7% y/y over this period. The average building cost of new housing completed increased by 5,7% y/y to R7 436 per square meter in the first seven months of the year, compared with R7 036 per square meter in the corresponding period last year.

Residential building costs increased by a 1,2% y/y in real terms, i.e. after adjustment for the effect of inflation, in the 7-month period up to July, based on an average headline consumer price inflation rate of 4,4% y/y over this period.

 

Building activity with regard to alterations and additions to existing houses slowed down, with both the building area approved and the building area reported as completed showing a contraction on a year-on-year basis in the seven months up to July. The building cost of completed alterations and additions to existing houses recorded double-digit growth of 14,2% y/y to R7 177 per square meter in January to July (R6 286 per square meter in January to July 2017).

In real terms, the average building cost of completed alterations and additions to existing houses increased by 9,4% y/y over this period. Against the background of a struggling economy, increased financial pressure on consumers and low building confidence in the first three quarters of the year, residential building activity in general is expected to remain in line with recent trends in the rest of the year.

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

• Houses of <80m²: R5 759, up by 22,2% y/y. 
• Houses of ≥80m²: R7 352, up by 3,4% y/y. 
• Flats and townhouses: R7 920, down by 3,0% y/y.

Last modified on Monday, 08 October 2018 01:46

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