Continued contraction in levels of residential building activity

21-04-2017
Read : 50 times
SA Construction News
Source

Residential building activity with regard to new private sector-financed housing in South Africa (see explanatory notes) continued to contract in the first two months of 2017 compared with the corresponding period in 2016.

This is according to data published by Statistics South Africa. Contractions in building activity were evident in all segments of new housing as well as in respect of additions and alterations to exiting houses in both the planning and construction phases up to February this year. However, it was only the segment for flats and townhouses that recorded an improvement in building activity, which was with regard to the number and building area of plans approved.

The number of new housing units for which building plans were approved contracted by around 10% year-on-year (y/y), or 886 plans, to a total of 7 927 plans in the first two months of the year.

This decline in building plans approved was driven by the two segments of houses, which recorded a contraction of 21,6% y/y, or 1 189 plans, to a combined total of 4 309 plans compared with 5 498 plans approved in the same period last year. However, the number of plans approved for new flats and townhouses increased by 9,1% y/y, or 303, to a total of 3 618 plans in January and February.

The construction phase of new housing, measured by the number of units built, contracted by 16,7% y/y, or 1 102 units, to a total of 5 487 units up to February this year. The decline in new housing built occurred across all three market segments.

The building area in respect of additions and alterations to existing houses contracted in both the planning and construction phases by 8,0% y/y and 9,4% y/y respectively in the two months up to February.

The average building cost of new housing constructed in the first two months of the year increased by 12,3% y/y, which was more than the headline consumer price inflation rate of 6,2% y/y over this period, to an average of R7 183 per square meter compared with R6 398 per square meter in the corresponding period last year. The average building cost and the year-on-year percentage change in the rand value per square meter in the three categories of housing constructed were as follows in the two months up to February this year:

• Houses of <80m²: R4 843, up by 22,2% y/y

• Houses of ≥80m²: R7 240, up by 12,1% y/y

• Flats and townhouses: R8 072, up by 8,9% y/y

Residential building activity is forecast to remain largely subdued in 2017 against the background of trends in and the outlook for the economy, household finances and levels of consumer and building confidence.