Cape Town - The average building cost of new housing constructed in 2016 increased by 6.9% to an average of R6 614 per square metre compared with R6 185 per square metre in 2015, according to Jacques du Toit, property analyst at Absa Home Loans.
Average growth in building costs has been about 9% per annum in the past ten years compared with an average headline consumer price inflation rate of 6.3% per annum over the same period.
The average building cost and the year-on-year percentage change per square metre for houses smaller than 80m² was R4 436 (up by 14.7% from R3 869 in 2015); that of houses of 80m² or bigger was R6 683 (up by 4.7% from R6 383 in 2015); and that of flats and townhouses was R7 659 (up by 6.2% from R7 213 in 2015).
Residential building activity is expected to remain largely subdued in 2017, according to Du Toit.
He said this is against the background of the continued relatively low level of consumer and building confidence, as well as recent trends and the outlook for the economy and household finances.
"Levels of building activity in the SA market for new housing remained largely subdued in 2016, which were in line with trends since 2009 when the economy experienced recessionary conditions," said Du Toit.
"The planning phase of new housing, as reflected by the number of building plans approved by local government institutions, showed some contraction last year compared with 2015. The construction phase of new housing - that is the volume of housing units reported as completed - recorded growth of much in line with that of 2015."
READ: Building a house now costs 7.5% more
The number of new housing units which gained building plan approval was down by 6.4%, or 3 836 units, to 56 143 units in the 12 months up to December last year compared with a year ago. This came to only 54.7% of a total of 102 691 plans approved ten years ago in 2007.
According to Du Toit, the drop in building plans approved in 2016 was largely the result of a combined decline of 16.5%, or 6 550 units, to a total of 33 214 units in the two segments of new houses. However, the number of plans approved for new flats and townhouses increased by 13.4%, or 2 714 units, in the 12-month period.
The volume of new housing units built increased by 4.6%, or 1 820 units, to 41 489 units in 2016 from 39 666 units constructed in 2015. This improvement in the construction phase was mainly the result of growth of around 19%, or 2 198 more units built in the segment for flats and townhouses to a total of 13 691 units last year. The two segments of houses showed a combined decline of only 1.3%, or 375 units, to 27 798 units in 2016.
The real value of plans approved for new residential buildings increased by R289.8m, or 0.6%, to R50.72bn in 2016, with the real value of new residential buildings reported as completed increasing by R629.5m, or 2%, to R32.79bn last year. These real values are calculated at constant 2015 prices.
Read Fin24's top stories trending on Twitter: