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Johannesburg - Shocking declines in the number of property units completed in January 2010 reflect how South Africa's housing industry has been stopped short.
Although the housing market has turned in terms of pricing, Statistics South Africa's latest construction figures show that the house-building industry is under severe pressure, with no turnaround in sight.
Provinces under the cosh include the Free State, where January saw only three townhouses being completed, compared with 214 in January 2009.
In Limpopo last year 769 houses of under 80m² were completed and in January this year four.
Countrywide, the number of units completed in the three residential segments declined 52.6% to 2 255 units.
At the same time 1 097 houses greater than 80m² were completed, 34.5% less than last January's figure. Houses under 80m² were 32.2% down - to 749 units.
Things look no better on the planning side and building plans approved for the three segments were 55.1% down to 2 483 units.
Jacques du Toit, senior property analyst at Absa's home loan division, says the price difference between existing houses and those newly built could have a role in the decline. In the fourth quarter of last year it was 20.5% more expensive to build a new house than to buy an existing one.
Some banks these days grant only 60% mortgage loans on empty stands, which means that the prospective homebuilder will be granted a loan of only R600 000 for a R1m erf, and will have to find the other R400 000 himself.
The house then still has to be built and there are always additional expenses, Du Toit points out. At this stage it is therefore a better bet to buy an existing unit.
Erwin Rode, a property valuer and economist at Rode and Associates, says residential developers have been massacred. A common problem is that they bought land three years ago when prices peaked.
For those who have since built new units, their problems involve cash flows and survival - and if necessary they should not even attempt to make a profit, he advises.
- Sake24.com
For business news in Afrikaans, go to Sake24.com.