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Johannesburg - Economists say that the housing market is likely to endure further pressure into 2009, after Statistics SA data revealed a year-on-year decline of recorded building plans passed.
On Wednesday, the data showed that the real (after-inflation) value of recorded building plans passed by larger municipalities (at constant 2000 prices) during January to June 2008 decreased by 10.0%, or R2.3bn, compared with January to June 2007.
"This is an indication that the market has contracted, and it squares with the average 30% to 40% decline in successful mortgage applications amongst banks from a year ago," said Standard Bank economist, Goolam Ballim.
Decreases were also reported for residential buildings, which were down 18.7% or R2.4bn and additions and alterations, which were 5.1%, or R300.2m, lower.
However, an increase of 9.6%, or R417.7m, was reported for non-residential buildings.
Economists said that the data reflects how financially strained consumers are.
"It also concurs with the fundamentals of households and is in line with declining house prices," said Ballim.
He said that as many building plans had been delayed due to the Eskom debacle earlier this year, building had been under a lot of pressure during the year.
- Fin24.com