Sharp fall in house plans

Residential building activity in the first ten months of this year remained under pressure and the outlook looks anything but rosy.

On the planning side, the number of plans approved for new housing from January to October, declined by 6.7% on an annual basis to 41,778 units, evidenced by the latest building statistics.

On the construction side, the number of units completed between January and October, low single digit growth of 2.5% to 34,506 units shown on an annual basis.

Jacques du Toit, property analyst at Absa Home Loans, said it was worrying that the number of plans approved for new homes smaller than 80 m² in ten months decreased by 19.4% on an annual basis.

That indicates that plans declined to 15 280 units from the 18 967 last year. "This is not good news, because the biggest question here is affordability," he said.

At the same time, 2.5 percent fewer homes smaller than 80 m² were completed in the last ten months.

Du Toit said building activity associated with renovations and additions also remained subdued in the ten months leading up to October, largely because of the condition of homeowners' finances.

Against the background of economic development, the state of household finances and weak consumer confidence, he expects residential building activity to remain muted in the short to medium term.

An interesting trend is expected to continue, the decrease in the average unit size of new properties. The average size of a home in September amounted to 114.4 m² to 141 m² in 2006.

This trend is associated with higher-density developments as land in urban areas are becoming scarcer.


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