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March 2016
Housing
G
rowth in the planning phase of
new housing and the number
of building plans approved
by local authorities was markedly
down in 2015 compared to the previ-
ous year.
Jacques du Toit, Absa Home Loans
Property Analyst says, “The con-
struction phase of new housing and
the volume of housing completed
showed some growth in 2015, after
two consecutive years of contrac-
tion. These trends are based on data
published by Statistics South Africa in
respect of building activity financed
by the private sector.”
The number of new housing units
for which building plans were ap-
proved increased by 5% to a total of
59 667 units in 2015. Smaller-sized
houses (80m²) apartments/town-
houses were themain contributors to
the increased level of plans approved.
Thesemarket segments have been
the major focus of housing supply
for the past 20 years. This is due to
factors such as the availability of
development land andbuilding costs,
especially the major metropolitan
areas of the country.
Although the number of newhous-
ing units increased by 4,3% to 39 671
units in 2015, the apartment/town-
house segment showed a contraction
of around 3% in construction activity
in 2015 compared with 2014.
The real value of plans approved
for new residential buildings in-
creased by 3,7%, or R1,37 billion to
R38,08 billion in 2015 from R36,71
billion in 2014. The real value of resi-
dential buildings was up by 9,3%, or
R2,13 billion, to R25,11 billion in 2015
compared to R22,98 billion in the
previous year.
The average new house costs
R6 185 per m² in 2015, or 6,2% higher
than R5 825 per m² in 2014. Building
costs have been steadily above con-
sumer price inflation over the past
10 years. This is due to a number of
factors such as building material,
labour, transport, equipment, land
prices, rezoning, and developer and
contractor holding costs and profit
margins.
Residential building activity will
continue to be driven by a growing
population and number of house-
holds. However, activity levels in the
various segments of new housing
will continue to be influenced by
macroeconomic trends and develop-
ments, household finances, lifestyle
trends and consumer and building
confidence.
Du Toit concludes, “Economic
growth is expected to be around
0,9% in 2016, consumers will face
increased financial strain on the back
of rising inflation, higher interest
rates and increasing property-related
costs. These trends will have a damp-
ening effect on the demand for and
supply of new housing over the next
twelve months.”
■
Muted growth in residential building
Levels of residential building activity in the South African market for
new housing improved in 2015, but growth remained relatively low
at between 4% and 5% compared to 2014.