24 Jul.
Residential building activity giving mixed signals.
An improvement in building activity in the South African housing market was evident
with regard to the planning phase in the first five months of 2011 compared with the
corresponding period in 2010. This improvement was mainly in the higher-density
category of flats and townhouses. The construction phase, however, showed a
contraction, driven specifically by the flats and townhouse category.
In the first five months of 2011 the real value of plans approved for new residential
buildings was up by 2,4% year-on-year (y/y) to R7,23 billion, from R7,06 billion in the
same period last year. The real value of new residential buildings reported as
completed in January to May this year was down by 8,9% y/y to an amount of R5,47
billion, from R6,01 billion a year ago. The abovementioned real values are calculated
at constant 2005 prices.
The number of new housing units for which building plans were approved by local
government institutions was marginally up by 1,7% in the first five months of the year
compared with a year ago. In May plans were approved for a total of 3 874 new
housing units, 32% higher than in April, mainly due to seasonal factors. However, the
number of plans approved in May was 41,6% lower on a year-on-year basis. This
was the result of a high base of calculation of 6 635 housing units for which building
plans were approved in May 2010.
The volume of new housing constructed was 8,3% y/y lower in the period January to
May this year on the back of a decline of almost 11% y/y in the flats and townhouse
category, whereas the small-house category improved by 6% y/y in the period. The
decline in the number of new flats and townhouses constructed so far this year
compared with a year ago is most probably the after-effect of a contraction of almost
26% in plans approved for these types of housing in 2010. The higher level of activity
in the planning phase of flats and townhouse in the first five months of 2011 will only
impact the construction phase at a later stage. …
Read more at Absa Property Research
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