Divergent trends in residential building activity in early 2019

Posted On Wednesday, 24 April 2019 12:08 Published by
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Much in line with developments in 2018, private sector-financed building activity (see explanatory note) in the South African market for new housing showed divergent trends in early 2019, based on data released by Statistics South Africa.

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The number of building plans approved for new housing was down by 19,8% year-on-year (y/y), or 2 160 plans, to 8 739 plans in the first two months of the year. The contraction in plans approved was driven by the two segments for houses, with the segment for flats and townhouses showing growth of 4,8% y/y over the 2-month period.

The volume of new housing units reported as being completed increased by 6,2% y/y, or 358 units, to a total of 6 101 units in January and February this year. The two segments for houses constructed showed a combined contraction of 2,1% y/y to a total of 2 784 in the first two months of the year. However, the number of flats and townhouses built was up by 14,4% y/y, or 418 units, to a total of 3 317 units in the above-mentioned 2-month period. 

The average building cost of new housing completed increased by 4,9% y/y to R7 793 per square meter in the first two months of 2019 from R7 432 per square meter in the corresponding months of 2018. In real terms, i.e. after adjustments for inflation, residential building costs were down 0,6% y/y, based on an average headline consumer price inflation rate of 4,3% y/y over the 2-month period. The average building cost per square meter in the three categories of new housing was as follows in January and February this year:

  • Houses of <80m²: R5 918, up by 8,6% y/y.
  • Houses of ≥80m²: R7 630, up by 3% y/y.
  • Flats and townhouses: R8 224, down by 4,5% y/y.


Building activity with regard to alterations and additions to existing houses remained under pressure in the first two months of the year, with the building area approved rising by a marginal 0,5% y/y, whereas the building area reported as being completed contracting by 19,7% y/y. The building cost of completed alterations and additions to existing houses increased by 8,4% y/y to R7 543 per square meter in January and February this year from R6 959 per square meter in the same months last year. In real terms, the average building cost of completed alterations and additions to existing houses increased by 3,9% y/y over this period.

Against the background of general economic conditions and prospects, confidence in the building sector was much subdued in the first quarter of 2019. In view of these developments and financial strain experienced over a wide front by the household sector, which were evident in a low level of consumer confidence in the second half of last year, residential building activity is expected to remain under pressure over the short to medium term.

Last modified on Wednesday, 24 April 2019 12:26

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