Residential building activity improves

Johannesburg - The first seven months of 2015 saw improved levels of building activity with regard to new private sector-financed housing in South Africa, based on data published by Statistics SA.

However, Jacques du Toit, property analyst at Absa Home Loans, said growth in activity levels in both the planning and construction phases of new housing was largely segment driven up to July this year.

The number of new housing units for which building plans were approved was up by around 5% year-on-year (y/y) to more than 35 000 units since January, with strong growth of 15.5% y/y recorded in the category of flats and townhouses.

The two house-related segments showed very little movement in the first seven months of the year compared with a year ago.

Growth in the number of new housing units constructed was recorded at 6.3% y/y, with a total of almost 22 000 units built in the seven months up to July. This growth was largely the result of a relatively strong improvement in new houses built to the tune of 19% y/y to a total of 15 951 units, according to Du Toit.

The number of new flats and townhouses built was down by 17.3% y/y in the seven-month period.

"With these housing developments normally taking quite some time to complete as a result of the extent of construction, the double-digit growth in the planning of these types of housing will probably be reflected in the construction phase at a much later stage," explained Du Toit.

The average cost per square metre of new housing built came to R6 014 in the first seven months of 2015, which was 5.3% higher than in the corresponding period last year. Over the same period the building costs per square metre for houses smaller than 80m² were up by 12.8% y/y to R3 884. That of houses bigger than 80m² was up 4.8% to R6 293 y/y. Over the period the average building costs of flats and townhouses increased by 8.4% y/y to R6 864.

"Growth in activity levels in the various segments of new housing built will be a result of the magnitude of the planning and construction phases, with a significant lag between the planning and eventual completion based on the extent of such housing developments, as well as other factors such as the process of rezoning and preparation of development land and the availability of municipal services such as water, sewerage and electricity,” said Du Toit.

“Trends in and the outlook for the economy, household finances and consumer and building confidence are also important drivers of residential building activity.”