Residential building statistics 15 February 2018

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1 Compiled by Jacques du Toit Property Analyst Absa Home Loans 15 Troye Street Johannesburg 21 PO Box 7735 Johannesburg 2 South Africa Tel +27 () jacques@absa.co.za Explanatory note: The residential building statistics refer to private-sector financed housing, largely excluding government-subsidised low-cost housing, for which information was reported by local government institutions. The information in this publication is derived from sources which are regarded as accurate and reliable, is of a general nature only, does not constitute advice and may not be applicable to all circumstances. Detailed advice should be obtained in individual cases. No responsibility for any error, omission or loss sustained by any person acting or refraining from acting as a result of this publication is accepted by Absa Bank Limited and/or the authors of the material. Residential building statistics 15 February 218 Residential building activity in 217 much in line with trends since 21 Levels of building activity in the South African market for new housing remained subdued in 217, which were much in line with trends since 21 after the economy emerged from recession in 28/9. The planning phase of new housing, as reflected by the number of building plans approved by local government institutions, showed low single-digit growth in 217 from 216. The construction phase of new housing, i.e. the volume of housing units reported as completed, contracted last year after relatively low growth was achieved in 216. These trends are based on data published by Statistics South Africa in respect of building activity related to private sectorfinanced housing (see explanatory note). The number of new housing units for which building plans were approved, increased by only 1,8%, or 1 4 plans, to plans in the twelve months up to December last year compared with a year ago. This came to 67,2% of a total of plans approved ten years ago in 28. The drop in building plans approved in 217 was largely the result of a combined decline of 5%, or plans, to a total of plans in the segments of new houses equal to or larger 8m² and flats and townhouses. The number of plans approved for new houses smaller than 8m² increased by 16,9%, or plans, to plans in 217. The number of new housing units reported as being completed was down by 6%, or 2 53 units to a total of units in 217 from units built in 216. This contraction in the construction phase was largely the result of a combined decline of 1,1%, or 2 82 units, to a total of units in the two segments of new houses. The segment of flat and townhouses houses showed growth of only 2,3%, or 317 units, to units constructed in 217. The average building cost of new housing completed was up by 8,1% to an average of R7 151 per square meter in 217, compared with R6 617 per square meter in 216. In real terms, i.e. after adjustment for inflation, residential building costs increased by an average of 2,7% last year, based on an average headline consumer price inflation rate of 5,3% last year. The average building cost per square meter in the three categories of new housing was as follows in January to December 217: Houses of <8m²: R4 814, up by 8,5% on 216. Houses of 8m²: R7 163, up by 7,2% on 216. Flats and townhouses: R8 232, up by 7,4% on 216. Building activity with regard to alterations and additions to existing houses contracted in 217, with the building area approved declining by 1,6% and the building area reported as completed contracting by 4,2%. The building cost of alterations and additions to existing houses increased by 1,9% to R6 564 per square meter in 217 (R5 919 per square meter in 216). In real terms, the building cost in this segment of the property market was up by 5,3% last year. In line with the abovementioned trends in residential building activity, confidence levels in the building industry, i.e. with regard to building material manufacturers, architects, quantity surveyors, building sub-contractors and hardware retailers, remained on a downward trend up the end of last year. Against the background of an expected uptick in economic growth, inflation to remain within the inflation target range of 3%-6%, stable to possibly somewhat lower interest rates, a hopefully more stable political environment and higher levels of confidence and sentiment in general, residential building activity may show some improvement 218.

2 Residential building activity: January - December 1 Segment Units Units 217 m² Building area 217 Units Units 217 m² Building area Number % 216 m² % 216 Number % 216 m² % Houses of <8m² Houses of 8m² Flats and tow nhouses Total Period Units y/y % Units y/y % Units y/y % Units y/y % Residential building activity 1 Houses Houses Flats and Total <8m² 8m² townhouses % Plans approved Residential building activity % share January - December 217 Houses <8m² Houses 8m² Flats and townhouses Home Loans 2

3 9 Residential building activity Number of houses, flats and townhouses Plans approved 2 Growth in residential building activity Houses, flats and townhouses 1 % Plans approved Residential building activity: plans approved Number of houses, flats and townhouses Houses <8m² Houses 8m² Flats and townhouses Home Loans 3

4 8 Residential building activity: buildings constructed Number of houses, flats and townhouses Houses <8m² Houses 8m² Flats and townhouses Building confidence index 5 = neutrality Source: BER Construction confidence index 5 = neutrality Source: BER Home Loans 4

5 Residential building activity Segment Units % of total Units % of total Houses of <8m² Houses of 8m² Flats and tow nhouses Total Segment Variable WC EC NC FS KZN NW GAU MPU LIM SA New houses Number (<8m²) % of region % of SA New houses Number (>8m²) % of region % of SA New flats Number and % of region townhouses % of SA Total houses, Number flats and % of region townhouses % of SA Segment Variable WC EC NC FS KZN NW GAU MPU LIM SA New houses Number (<8m²) % of region % of SA New houses Number (>8m²) % of region % of SA New flats Number and % of region townhouses % of SA Total houses, Number flats and % of region townhouses % of SA Residential building activity by province Home Loans 5

6 Segment Period Variable WC EC NC FS KZN NW GAU MPU LIM SA New houses Jan-Dec 16 Number (<8m²) January - Number December % change % of SA New houses Jan-Dec 16 Number (>8m²) January - Number December % change % of SA New flats Jan-Dec 16 Number and January - Number townhouses December % change % of SA Total new Jan-Dec 16 Number houses, January - Number flats and December % change townhouses 217 % of SA Alterations Jan-Dec 16 m² and additions January - m² to existing December % change houses 217 % of SA Segment Period Variable WC EC NC FS KZN NW GAU MPU LIM SA New houses Jan-Dec 16 Number (<8m²) January - Number December % change % of SA New houses Jan-Dec 16 Number (>8m²) January - Number December % change % of SA New flats Jan-Dec 16 Number and January - Number townhouses December % change % of SA Total new Jan-Dec 16 Number houses, January - Number flats and December % change townhouses 217 % of SA Alterations Jan-Dec 16 m² and additions January - m² to existing December % change houses 217 % of SA Residential building activity by province 1 Building cost of new housing constructed 1 Period Houses of <8m² Houses of 8m² Flats and tow nhouses Total Rand per m² y/y% change Rand per m² y/y% change Rand per m² y/y% change Rand per m² y/y% change Home Loans 6

7 Rand 9 Average building cost per m² of new housing constructed All housing Houses <8m² Houses 8m² Flats & townhouses 12 Growth in average building cost per m² of new housing constructed 1 8 % Home Loans 7

8 Alterations and additions to existing houses 1 Period Building area Value Building cost per m² m² y/y % change Rand million) y/y % change Rand y/y % change Alterations and additions to existing houses Total square metres Plans approved Completed Home Loans 8

9 2 Growth in alterations and additions to existing houses Total square metres 1 % Plans approved Completed Rand per m² 7 Building cost of completed alterations and additions to existing houses Growth in building cost of completed alterations and additions to existing houses % Home Loans 9