Plans for building new homes plummet in EC

plans for building new homes plummet in ec

high interest rates and cash- strapped consumers have caused the number of approved residential building plans to fall by a massive 53.7 percent in the eastern cape during the first four months of the year.

this fall has in turn hit east london building contractors, whose business depends on the demand for new homes .

data released by absa last week revealed that only 568 residential building plans were passed in the province between january and april, compared with the 1227 plans passed during the same period last year.

this leaves the province standing on a negative 53.7 percent, the second largest provincial fall after the north west province, which experienced a negative 57.6 percent growth in building plan approvals.

an east london-based building contractor, brett petersen from progressive builders, said since last year they had seen a drop in their number of clients .

dmd maintainers’ don delport said the drop in business was the result of current high interest rates, which affected the entire building industry.

“people now do not have disposable income anymore,” said delport.

buffalo build it owner lyndre marais-meyer said most of their customers who are developers have been battling with finding land to develop, which could be a factor contributing to the decline.

“in some cases, they do find land to develop, but realise that there is no infrastructure for new houses,” said marais-meyer.

pam golding properties’ east london principal hanlie bassingthwaighte said the current downturn was a correction in the market after some years of solid growth in the property industry.

“in the last three years, there has been an extraordinary boom but now, with the current economic conditions, people are finding it difficult. also, the electricity problem made a big impact,” said bassingthwaighte.

she said new applications for plans were decreasing due to people consolidating their debts, and market correction.

absa property economist jacques du toit, who compiled the data, said the decline was a result of the cooling in the market, with high interest rates having an impact.

“this has caused property affordability to come under pressure. the economic pressure is reflecting on the building industry, like in other industries,” said d u toit.

he said the situation was not expected to improve until the flat national economy itself improves.

“we do not expect that this year or next year, until late 2009 and 2010. however, the non-residential market, like infrastructure, will gain, while the residential market remains relatively flat,” d u toit said.

the statistics also show that the real value of residential buildings completed and reported to local government institutions across the entire country declined by 9.1 percent during january to april 2008, compared with the r8.23 billion passed during the same period last year.