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Standard Bank Group
The SA Daily 27 November 2018

Residential building in recovery

  • Private-sector-financed residential building is still subdued, but recovering, with new units in the planning phase calling for some optimism despite depressed building confidence.
  • New building plans approved, as indicator of pipeline supply, have increased. However, housing units reported as complete, as indicator for supply of new residential stock, show contrasting trends. The real value at 2015 prices and seasonally adjusted of new stock rose – but new housing units remain in contraction. January-September 2018, new housing units are 4.4% lower than last year. The estimated average building cost of new housing has moderated, up only 3.6% y/y over the same period in 2017 year. After adjusting for inflation, residential building costs have therefore decreased by an average of 0.9% y/y (with CPI at 4.5% y/y) in January-September 2018.
  • Residential building will likely keep improving, albeit modestly, this year, because building costs have been moderating. We’d also expect easing pressure on household income, which too should see build demand recover.
  • However, much will depend on economic conditions and whether uncertainty can ease and thereby shift sentiment ahead of the 2019 elections (see September residential building stats of 16 November, by Siphamandla Mkhwanazi).

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