Residential building activity contracts

Cape Town - Building activity in SA for new private sector-financed housing contracted in both the planning and construction phases compared with the corresponding period last year, according to Jacques du Toit, property analyst at Absa Home Loans.

It is based on data released by Statistics SA.

"Against the background of trends in and the outlook for the economy, household finances, consumer confidence and building confidence, levels of and growth in residential building activity are expected to remain under pressure towards the end of 2017 and in 2018," said Du Toit.

In January the average building cost per square meter of houses of less than 80m² was R4 764 (up by 9.7% y/y); that of houses of ≥80m² was R7 155 (up by 8.7% y/y) and that of flats and townhouses was R8 125 (up by 7.3% y/y).

The average building cost of new housing increased by 8.6% y/y to an average of R7 078 per square meter in the first nine months of 2017, compared to R6 519 per square meter in the corresponding period last year.

In real terms - that is after adjustment for inflation - building costs were up by an average of 2.9% y/y in the 9-month period, based on headline consumer price inflation that averaged 5.5% y/y over the same period.

Building plans

According to Du Toit, the number of building plans approved for new housing was down by a marginal 0.3% year-on-year (y/y) - or just 126 plans - to a total of 41 084 plans in the 9-month period up to September this year.

Plans approved in the segment of houses smaller than 80m² increased by 8.2% y/y in January to September. The segments for houses equal to or larger than 80m² and flats and townhouses recorded a drop of 4.4% y/y and 4.2% y/y respectively in the number of plans approved in the nine months up to September.

The volume of new housing units reported as being completed dropped by 2.4% y/y, or 725 units, to a total of 28 931 units in January to September.

The segment for houses of 80m² and larger showed a significant contraction of 19.3% y/y, or 1 767 units, to 7 409 units over this period. This contributed to the total building area of homes completed in this category declining by 11.1% y/y.

The other two categories of housing showed combined positive growth of 5.1% y/y in the number of new housing units built over the 9-month period.

Building activity with regard to alterations and additions to existing houses remained subdued in January to September, with the building area approved declining by 0.8% y/y and the building area reported as completed rising by 0.8% y/y.

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