Prospects for South African housing sector improved by latest Absa figures

A 41,9% year-on-year increase in the plans approved for new housing units could herald the start of a new era in South Africa’s residential property sector, says Mike van Alphen, National Manager of the Rawson Property Group’s bond origination division, Rawson Finance.

Despite the generally accepted opinion that, as a result of the stringent financial constraints under which they operate, coupled with the serious lack of mortgage finance, middle class South Africans will see no significant upturn in the housing sector for the foreseeable future. Van Alphen said that that this big increase in building plans augers well for residential property.

Quoting from the latest Absa Home Loans Review, van Alphen said that the banks’ figures show that building costs, as always, had increased in line with the upturn in plans passed, but, he said, at an average price of R5,682 per m2, South Africa’s home building costs are still by any standards very reasonable.

“When we see the figures for buildings completed once again matching those of the plans achieved, we will, I think, be into a new and more buoyant phase – and in my view this could take place in the first half of 2015.”

It has always to be remembered, said van Alphen, that the higher the number of homes built, the more contractors are able to keep the average price per unit down.  This has been proved many times in South Africa’s history.

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