17 Jun.
Significant improvement in residential building activity.
In the first four months of 2011, building activity with regard to new housing in the South African residential property market improved significantly in especially the planning phase compared with the same period in 2010. The construction phase has also showed a turnaround, with the full effect of recent developments in the planning phase expected to be reflected on the construction side at a later stage.
The volume of new housing units for which building plans were approved by local government authorities was up by a substantial 24,4% year-on-year (y/y), or 3 086 units, in the first four months of 2011. This sharp rise in plans approved was the result of strong growth recorded in the segments of houses smaller than 80m², and flats and townhouses (see table). These developments are a reflection of the increasing demand for smaller-sized and higher-density housing against the background of the affordability of housing and mortgage finance, while rapidly rising municipal rates, taxes and levies are also playing an important role.
On the construction side of the residential market, levels of activity also improved, driven by the category of houses smaller than 80m². However, it must be kept in mind that the construction phase of housing lags the planning phase, while not all new housing developments that are planned, will eventually be built. Influencing factors in this regard may include the availability and cost of finance, as well as the availability of municipal services at the time of planning and expected completion.
The significant improvement in the number of plans approved in especially the segments of smaller-sized houses and higher-density flats and townhouses is encouraging against the background of the huge need for housing in these categories of the market. These developments on the planning side, if sustained, are expected to positively impact the construction phase of these types of new housing in the second half of the year and into 2012. …
Read more at Absa Property Research
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