Property Talk

Author: Andreas Wassenaar
Date: 2013-11-01

What is happening in the residential building market? Are people building more or less? What type of properties are they building more or less of? Which provinces are experiencing more or less residential building activity? What are the trends telling us? Up or down or sideways?

If you are an estate agent or involved in providing any type of good or service to the residential property market, these questions would be of interest and could have an impact on your business. Stats SA compile excellent information on all of these key variables and make them available in report form. In October ABSA published their own analysis of these figures and this provides us with some interesting insights as to what is going on.

Depending over which period you look at the data you will tend to draw slightly different conclusions. If you look at the changes in total building plans approved and total buildings completed on a three month moving basis the first thing you will realize is the recent downward trend in activity, which started in May 2013. This gives us some indication of the current trend. Given the recent slowdown in SA's GDP growth it can be expected that households on average will hold back on new building.

If we look at the cumulative figures for January to August this year and compare these to last year, we do see growth. The number of building plans approved grew from 31,698 to 33,943 (7.1%) and the building area (sqm) of these approved plans grew from just over 4million sqm to just over 4,5million sqm. (11,5% growth).

If we look at the actual buildings completed over the same period, we see that the unit number was just about the same (no significant change) from 27,694 in 2012 to 27,518 in 2013. The total extent of building area completed grew from 3,11million to 3,23million sqm (January to August 2013).

It is interesting that there is such a difference between the extent of approved plans and that actually built. Almost 1million sqm of approved building is still somewhere in the pipeline. Of the growth experienced in both approved plans and building area completed, the category described as "Homes larger than 80 sqm" is the largest by far but the highest growth came from the "Flats and Townhouses" category.

To put it into perspective however, of the 3,23million sqm of building area completed from January to August this year, just under 2million sqm was for homes larger than 80 sqm and just under 800,000 sqm for Flats and Townhouses. As "Flats and Townhouses" would be predominately built by developers, while the category "Homes over 80 sqm" predominately by end-user home builders, it indicates how important the end-user home builders are to the industry and every professional or service provider to it.

Large retailers of building materials and product (such as tiles and bathroom products) do well therefore to service both the end-users and the building trade. The growth in the Flats and Townhouses category also indicates that developers are significantly more active this year than last year.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

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