Building statistics confirm slowing housing market

Residential building statistics released by Statistics South Africa for the period January-April 2008 confirm the slowdown currently experienced in the housing market.

The real value of residential buildings completed and reported to local government institutions declined by 9,1% year-on-year from R8,23 billion in January-April 2007 to R7,49 billion in the first four months of this year. All real values are at constant 2000 prices.

The real value of plans passed by local government institutions for new residential buildings increased by only 0,6% year-on-year from R13,83 billion in 2007 to R13,91 billion in 2008, calculated over the January-April period.

In terms of houses, the real value of plans approved dropped by 11,1% year-on-year from R9,05 billion in January-April 2007 to R8,05 billion in the same period this year.

However, Absa notes in its comments on the figures, the real value of plans passed for flats and townhouses increased by 23,1% year-on-year from R4,41 billion in the first four months of last year to R5,43 billion in the corresponding period this year. This is
probably a reflection of the demand for more affordable, smaller and thus higher-density housing.

In terms of the volume of new residential buildings completed in January-April 2008, all three segments of the market performed relatively poorly. This could have been the
result of factors such as deteriorating market conditions as well as the impact of the non-availability of infrastructure, such as electricity, in certain cases during this period.

The growth in the volume of plans passed for new residential building units dropped significantly with regard to houses with a building area of below 80 m², as well as those of more than 80 m² in the first four months of the year. It was only the flat and townhouse category that recorded some growth in plans passed in January-April this year.

“This again,” says Absa, “may be an indication of the demand for higher-density and more affordable housing, while the availability of serviced development land for housing may also be playing a role in the increasing focus on this type of housing,
especially in the major urban areas.”

On a provincial basis, residential building activity was dominated by Gauteng, followed by the Western Cape and KwaZulu-Natal. As a result of different property market cycles and a divergence in volumes and the nature of the property market at provincial level, the growth in plans passed and buildings completed differed significantly between the provinces.

However, with regard to the number of plans passed for new residential buildings, eight of the nine provinces recorded a decline on an annual basis in January-April 2008. Year-on-year growth in the number of buildings completed dropped in six of the nine provinces in the first four months of the year.
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