Housing in Southern Africa 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

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. ■

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

March 2016