Continued evidence of some diverging trends at segment level in the planning and construction phases of residential building activity.
Although the gap in building activity in South Africa with regard to new private sector-financed housing in the planning and construction phases narrowed to some extent recently, diverging trends across segments are still evident. As mentioned in previous reports on residential building activity, these trends could have been the result of significant lags in the reporting of completed housing to and/or approvals of plans for new housing by local government institutions.
Building plans approved for new housing contracted in all three segments of housing in the first eight months of 2019, with plans declining by 15,5% year-on-year (y/y), or 6 583 plans, to 35 977 plans in January to August. New housing units reported as being completed were up by 36% y/y, or 8 581 units, to a total of 32 435 units in the 8-month. The flat and townhouse segment remained the main driver of the growth in new housing built, showing continued strong growth of 91,5% y/y, or 9 227 units, up to August.
The average building cost of new housing completed was as follows in the three segments in January to August this year:
- Houses of <80m2: R5 752, down by 0,6% y/y.
- Houses of ≥80m2: R7 557, up by 2,7% y/y.
- Flats and townhouses: R8 269, up by 4,4% y/y.
Building activity with regard to alterations and additions to existing houses continued to show a fair amount of strain, with both the building area approved and the building area reported as completed contracting on a year-on-year basis in January to August.
The building cost of completed alterations and additions to existing houses increased by 2,5% y/y to a level of R7 400 per square meter in the 8-month period up to August compared with R7 218 per square meter in the corresponding period last year. Residential building activity will continue to be driven by trends in and prospects for the economy, household finances, business conditions in the building sector, levels of consumer and building confidence and property market sentiment.
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