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March 2016
Housing
R
esidential building plans
passed for apartments, town-
houses and houses over 80 m²
provides useful data in determining
the South African Reserve Bank’s
Composite Leading Business Cycle
Indicator. Residential construction
in 2015 was slightly better than 2014,
with the number of residential units
completed for last year growing by
+4,3%, compared to an -8,3%decline
in 2014.
However, says John Loos, FNB’s
Household and Property Sector Strat-
egist, “The level of building comple-
tions remains moderate compared
to the boom time peak reached late
in 2005. At the peak 2,706 million m²
were recorded as completed and ten
years later for the same period, only
1,420 million m², were recorded for
the three months to December 2015.
Building costs have limited the
ability of developers to bring ‘com-
petitively priced’ new homes to the
market. For the three months to
Residential
plans passed
December 2015, the year-on-year
average value of units completed
rose by 7,75% and of plans passed
by 3,07%.
Loos says, “This inflation rate is
noticeably lower than the high of
20,8% year-on-year for units com-
pleted, recorded in May 2014, but re-
mains in rising territory nevertheless.
However, low inflation in the average
value of plans passed suggests amore
aggressive drive to contain home af-
fordability, in tough economic times
moving forward.” Loos points out that
developers are attempting to address
affordability constraints by reducing
the size of the average homes built.
The average size for the three month
period to September 2015was 135,6m²
and in the last three months to De-
cember 2015 houses sizes dipped
marginally and averaged 129,8 m².
Loos anticipates that the average
size of houses built will be smaller
and that the current economic and
property conditions points to a slow-
ing down of demand for housing and
an easing of residential supply.
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