SA Property – Residential Building Statistics
Residential building activity slows down further
Data on residential building activity released by Statistics South Africa up to March 2009 indicate that the planning and construction phases of the housing sector slowed down further in the first quarter of the year.
In January-March this year, residential building plans with a total real value of R4,16 billion were approved by local government institutions, which was 50,3% lower compared with R8,38 billion in the first quarter of 2008. The real value of residential buildings reported as completed in the first quarter was 9,7% lower at R4,93 billion compared with R5,46 billion in same period last year. All real values are calculated at constant 2005 prices.
The number of residential building plans approved for houses smaller than 80 m² was up by a marginal 2,5% year-on-year (y/y) to 6 924 units in January-March this year. However, in the segments of houses larger than 80 m² and higher-density housing such as flats and townhouses, major declines were recorded in the number of plans approved on a year-on-year basis (see table below). The number of new housing units for which plans were approved was in the first quarter of the year at 13 864 units at its lowest level since the second quarter of 1994. This is an indication of the extent to which the market for new housing in these segments has slowed down compared with a year ago, largely driven by the economic conditions impacting the household sector and the demand for new housing.
In respect of new housing constructed, volumes were lower in all segments of the market in the first quarter of 2009, declining by 10,0% y/y to a level of 14 323 units. This was the lowest number of new housing units completed since the first quarter of 2005.
On the back of a slowing economy and employment coming under further pressure over a wide front, many households are expected to continue experiencing financial strain in the rest of the year, with the demand for new housing set to remain depressed, despite declining interest rates.
Courtesy: Jacques du Toit Senior Economist ABSA Bank
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