Friday, 22 February 2019 08:56

Residential building activity in 2018 in line with that of previous years

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Levels of building activity in the South African market for new housing remained subdued in 2018, which were much in line with trends since 2010 after the economy emerged from recession in 2008/09.


The planning phase of new housing, as reflected by the number of building plans approved by local government institutions, contracted marginally in 2018 from 2017. The construction phase of new housing, i.e. the volume of housing units reported as completed, showed some low singledigit growth last year after contracting in 2017. These trends are based on data published by Statistics South Africa in respect of building activity related to private sector-financed housing (see explanatory note). 

The number of new housing units for which building plans were approved was down by 0,5%, or only 300 plans, to 58 051 plans in the twelve months up to December 2018 compared with a year ago. This came to only 56,5% of a high of 102 691 plans approved in 2007. The slight drop in building plans approved in 2018 was largely the result of a decline of 17,8%, or 3 613 plans, to a total of 16 673 plans in the segment of new houses smaller than 80m², while the flat and townhouse segment showed growth of 15,7%, or 3 576 plans, to a total of 26 329 plans.

The number of new housing units reported as being completed increased by 3%, or 1 188 units, to a total of 40 202 units in 2018 (52,4% of a total of 76 661 units built in 2007) from 39 014 units built in 2017. Last year’s growth in the construction phase was largely the result of an increase of 26,9%, or 3 777 units, to a total of 17 825 units built in the segment of flats and townhouses, whereas the small-house segment (<80m²) contracted by 17,7%, or 2 502 units, to 11 662 units built in 2018. The significant drop in building activity with regard to smaller-sized houses in 2018 is a concern based on the substantial demand for housing in this segment of the market. However, flat and townhouse building activity has boomed last year, which is an indication of major changes in lifestyles and housing affordability in especially the major metropolitan regions in the country, with urbanisation that has increased to about 66%, or more than 37 million people in 2017, from a level of 57% of the population urbanised in 2000.  

New housing constructed will add to the country’s residential property stock. In the fourth quarter of 2018 there were reportedly about 6,7 million residential properties in South Africa with a total value of R5,4 trillion. Gauteng, the Western Cape and KwaZulu-Natal are the most prominent regional residential property markets, with these provinces having a combined share of 65,3% of the total number of residential properties nationally and 78,9% of the total value of residential properties in the country in the fourth quarter of last year.  

The average building cost of new housing completed was up by 4,6% to an average of R7 488 per square meter in 2018, compared with R7 156 per square meter in 2017. In real terms, i.e. after adjustment for inflation, residential building costs were unchanged last year, based on an average headline consumer price inflation rate of 4,6%. The average building cost per square meter in the three categories of new housing was as follows in 2018:

  • Houses of <80m²: R5 790, up by 19,5% on 2017.
  • Houses of ≥80m²: R7 361, up by 2,6% on 2017.
Last modified on Friday, 22 February 2019 09:03

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