23 Sep.
Short-term momentum in residential building activity appears to be waning.
Based on data released by Statistics South Africa, activity with regard to the planning of new housing improved markedly in the first seven months of 2011, with all three segments of the market showing positive year-on-year growth compared with the same period last year. The construction of new housing was also up in the period January to July this year, but the pace of improvement was significantly slower compared with that of the planning phase. However, the momentum in overall residential building activity appears to have tapered off over the past three months.
Year-on-year growth in the volume of new housing units for which building plans were approved from January to July this year was largely driven by the categories for smaller-sized houses and higher-density flats and townhouses. However, the total number of housing units for which plans were approved was marginally down by 0,2% to 6 139 in July from 6 156 in June.
In the first seven months of 2011 the number of new housing units constructed was up by only 3,3% year-on-year (y/y). The relatively low year-on-year growth recorded in new housing construction over this period was mainly driven by the higher-density segment of flats and townhouses, which showed a contraction of 12,3% y/y, whereas the number of smaller-sized houses built was up by 13,6% y/y. A total of 3 713 new housing units were constructed in July this year compared with 3 506 units built in the preceding month.
The real value of plans approved for new residential buildings was up by 3,6% y/y to R10,85 billion in the period January to July 2011, from R10,47 billion in the corresponding period last year. The real value of new residential buildings reported as completed in the first seven months of the year came to R7,9 billion, down by 7,3% y/y from a total of R8,53 billion a year ago. These real values are calculated at constant 2005 prices.
With the need and demand for housing in South Africa largely focused towards the lower end of the market, the trends evident in the planning phase of smaller-sized houses and higher-density flats and townhouses in 2011 are encouraging, with the expectation that these developments will be reflected in the construction phase of these types of housing towards the end of 2011 and in 2012. However, the future demand for and supply of new housing will be driven by developments with regard to the economy in general, but specifically by trends in respect of household finances. Units Units 2010 Number % change 2010 Number % change …
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