Bugle Sales Talk Editorial

If we look at the key statistics of the number of building plans approved and the number of homes completed we see that for the period January to March 2015 the number of plans approved contracted by 11% overall. There were 1,546 fewer home plans approved in the first quarter of this year relative to the first quarter of last year. The stats are further segmented in terms of homes smaller than 80 sqm, homes larger than 80 sqm and Flats & Townhouses. Plans approved for the homes smaller than 80 sqm contracted by a whopping 36.1%. Fortunately the plans approved for the Flats & Townhouses category improved by 15.5% over the same period. In terms of actual buildings completed over the first quarter of this year, the figures are down by 10.1% overall, with a big contraction of 27.5% across the Flats & Townhouses segment.

The figures show that 930 fewer homes were completed in the first quarter relative to the same period a year ago. This is significant when you think of it in terms of the 19 years it took Zimbali to develop and complete 943 homes to date with a further 120 under construction. Almost a thousand fewer homes built over a quarter translates into a lot less building material, property finance, interior décor and furniture supplied over the period. Similarly when just over 1,500 fewer home plans are approved for a period, this indicates less activity in the building sector over the short term, and impacts on many service providers to the industry, including estate agents. In terms of a provincial analysis, KZN represents 5.7% of the Building Plans approved and 5.3% of the Buildings Completed category across the country. For KZN there was no growth in plans approved and for the first quarter the number of buildings completed contracted by 38.2%. The Eastern Cape, Freestate and Mpumalanga were the big winners in terms of building activity in the first quarter with growth rates of buildings completed of 92.8%, 117.3% and 50.8% respectively.

The big winners in terms of building plans approved over the first quarter were Freestate, North West Province and Limpopo with growth of 63.8%, 62.2% and 11.5% respectively. Stats SA also provide interesting information on the alterations and additions to existing homes. In terms of overall square meterage approved for renovations across South Africa the first quarter was down by 2.6%. KZN makes up 10.8% of this renovations market and meterage of plans approved for renovations were down by 12.2% for KZN over the same period. Almost a quarter less renovation work happened in South Africa over the first quarter with 24.6% less square meterage of completed alterations and additions from January to March 2015. This has to be significant if you are in business supplying goods or services to this market.

So what is ABSA's forecast for the remainder of this year? In their report they refer to the major economic trends, which are pointing to an upward move in the general interest rate cycle with expected rising CPI inflation. They see household finances as coming under pressure in terms of servicing existing debt and pressure on disposable income. Their view for building activity for the rest of the year remains relatively subdued.

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