FNB: September Residential Building Stats


For the month of September, square metres’ worth of residential building completed grew by 14.8% year-on-year. This represents An increase on the prior months’ 9.6%.

However, as monthly data is traditionally volatile, it is preferred to analyse trends through smoothing the data with a 3-month moving average. Here it is seen as an continuation of the recent slowing growth trend in completions. For the 3 months to September, year-on-year growth of 7.4% represents a slower rate than the 9.1% for the 3 months to August, and a more noticeable slowing from the high of 28.8% recorded for the 3 months to June.

The 3 month moving average for Square Metres of Residential Plans Passed, too, has been recording slowing growth, from a 15.2% high for the 3 months to April, to 1.2% year-on-year for the 3 months to September.

A similar picture is witnessed when examining the number of residential units completed. Here, too, a rise in the year-on-year growth rate from 7.6% in August to 12.9% in September was witnessed. But smoothing using the 3 month moving average, a continuation of the growth slowdown to 2.55% year-on-year growth for the 3 months to September was seen, from a high of 31.5% for the 3 months to June. In short, the 3rd quarter showed slower residential building completions than the 2nd quarter, although both completions and plans passed growth rates were still positive.

The period of positive building completions growth dates back to late in 2014.

However, even after this period, the level of building completions remains moderate compared to the boom time peak reached late in 2005. Whereas for the 3-months to December 2005 2.706 million square metres were recorded as completed, the 3 months to September 2015 recorded 1.324 million, still less than half of the late-2005 peak level.

Currently moderate levels of new residential stock being supplied to the market are thus unlikely to cause any “gross” oversupply of property. However, we do believe that slowing residential demand to come, as a result of a weakening economy, should ultimately lead to some alleviation of residential supply constraints that are currently reported to be significant in some areas.


Building costs still appear to limit the ability of the Development Sector to bring “competitively priced” new homes to the market. For the 3 months to September, the year-on-year average value of units completed rose by 8%, and of plans passed by 5.1%.

This inflation rate is, however, noticeably lower than the high of 20.8% year-on-year for units completed, recorded in May 2014.

Slower increase in average value appears to have been helped by a slowdown in the inflation rate in Building Materials Cost inflation, as per the PPI for Building materials, to a lowly 1% year-on-year as at September.

Despite the challenge of competing price-wise with existing home values, the recently positive housing market environment has not only led to some positive growth during 2015, but has also seen an increase in the average size of homes completed, from a low of 105 square metres for the 3 months to April 2013 to 135.5 square metres for the 3 months to September 2015.

This reflects something of a loss in “market share” of the category “Dwelling Houses Smaller than 80 square Metres”, suggesting that building in the higher priced markets has grown a little faster than that in the so-called Affordable Housing Markets since around 2013.


Where too from here? Give the broad multi-year slowdown in the country’s economic growth, along with gradually rising interest rates and very weak Consumer Confidence, it would be expected the recent broad slowing in growth in residential completions is likely to continue into 2016.

Read more here: Property_Barometer_ Residential_Building_Stats_19_Nov_2015