Whatshot
Bugle Sales Talk Editorial
Bugle Sales Talk Editorial
Date: 2015-04-24
Residential building activity within South Africa is good to watch to get some insight into how house prices can be expected to grow over the next year.
ABSA's recently published report on Residential Building Statistics, which draws its data from Stats SA, shows that the first two months of 2015 has seen a decline in the number of building plans approved and the number of buildings completed. The data is segmented into homes below 80 sqm, homes above 80 sqm, and flats and townhouses.
The number of new housing units for which building plans were approved for the first two months of this year was 8,444. This is down by 6.1% on the same period for 2014.
For KZN plans for 444 new housing units were approved, which is down by 15.4% on the 2014 figures. KZN represents only 5.3% of all new building plans approved. It is interesting to note that the overwhelming powerhouses of new development vest with the Western Cape and Gauteng. For the Western Cape plans for 2,352 new units were approved in January and February this year. This is up by 12.9% on the previous year and represents 27.9% of all plans approved in the country. In Gauteng 3,372 new units were approved over the same period, representing a decrease of 18% over 2014 and 39.9% of all plans approved in the country. When considering the Western Cape and Gauteng together, building plans for new residential units approved represents as much as 67.8% of all new plans approved. This is astounding and provides perspective where the development money is being spent in the country. For companies that service the building industry it would be essential to have a strong presence in the Western Cape and Gauteng to be nationally relevant in any way. Even for professionals such as Architects, Engineers and Land Surveyors, it would be advisable to be able to have access to the markets in these two main nodes of economic activity. If we consider all plans approved for all alterations and additions to existing houses over the same two month period of January and February of this year we see that KZN's share grows to 10.6%, exactly double, which seems to indicate that we prefer to renovate existing homes than build new ones. One reason for this could be a relative shortage of new vacant land opportunities relative to other areas. On the alterations and additions side, the Western Cape makes up 30.8% of all this activity and Gauteng makes up 25.5%. The relative size of this activity in the Western Cape, where we know a relative shortage of new vacant land opportunities does exist and is probably even more pronounced than in KZN, does support the view that renovations activity as an alternate to building a new home is driven by the scarcity and cost of new vacant land.
The Western Cape and Gauteng's join share of the national renovations market as measured by plans approved is therefore 56.3%, which is 11.5% lower than their joint share of the new build market. When we consider the plans approved across the three segments we see that the plans approved for homes under 80 sqm is down by 27.9%, the plans approved for homes greater than 80% is down by a far smaller 4.7% and the plans approved for flats and townhouses is up by 23.3%. This is a significant statistic as it shows us that the new activity in the market is coming from residential developers of flats and townhouses. Living and working along the Dolphin Coast it is hard for us to imagine a freehold home smaller than 80 sqm and this segment does not feature in our immediate economic realm. We do however see that the developers are back in force with one new scheme being launched after another.
For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.
- Andreas Wassenaar
- Principal - Seeff Dolphin Coast
- Cell: 082 837 9094
- andreasw@seeff.com
- Word Count: 653