On a year-on-year basis the number of building plans approved by local government institutions was lower in January to March, whereas the number of housing units reported as completed showed strong growth over this period. These trends in first-quarter residential building activity may be the result of significant lags in the reporting to and/or approvals by local government institutions.
The number of building plans approved for new housing was down by 19,3% year-on-year (y/y), or a total of 2 958 plans, to 12 385 plans in the three months up to March this year. This drop in plans approved came on the back of marked contractions in the two categories of houses in the 3-month period compared with a year ago.
The volume of new housing units reported as being completed was up by 47,9% y/y, or 6 848 units, to a total of 11 890 units in the first three months of the year. The number of flats and townhouses completed increased by a massive 90,6% y/y to 7 042 units in this period.
The average building cost of new housing completed increased by 5,4% y/y to R7 813 per square meter in the first quarter of 2019, compared with R7 365 per square meter in the corresponding period last year. Residential building costs were up by 1,8% y/y in real terms, i.e. after adjustment for the effect of inflation, in the 3-month period up to March, based on an average headline consumer price inflation rate of 4,2% y/y over this period. The average building cost per square meter in the three categories of new housing was as follows in January to March:
- Houses of <80m²: R5 695, up by 3,9% y/y.
- Houses of ≥80m²: R7 599, up by 3,5% y/y.
- Flats and townhouses: R8 269 up by 5,7% y/y.
Building activity regarding alterations and additions to existing houses continued to contract in respect of both building area approved and the building area reported as being completed on a year-on-year basis in the first three months of the year. The building cost of completed alterations and additions to existing houses increased by 7,8% y/y to R7 573 per square meter in the 3-month period compared with R7 026 per square meter in the first quarter of last year. In real terms, i.e. after adjusting for inflation, building costs of completed alterations and additions with regard to existing houses increased by 3,5% y/y up to March this year.
Trends in and the outlook for the economy, household finances, confidence levels and property market sentiment in general will over the short to medium term continue to drive residential building activity.