Value of building plans up by 3.0%

The value of recorded building plans passed by larger municipalities increased by 3.0 percent or R1 774.5 million from January to November 2011.

According to the selected building statistics of the private sector as reported by local government institutions, November 2011, this was higher than the same period in 2010.

The report released by Statistics South Africa (Stats SA) indicates that increases were reported for non-residential buildings (17.8 percent or R2 206.1 million) and residential buildings (6.9 percent or R1 737.0 million) as opposed to a decrease reported for additions and alterations (-9.9 percent or -R2 168.6 million).

Six provinces reported year-on-year (y/y) increases in the value of building plans passed during January to November 2011.

The increase in the value of building plans passed was dominated by Mpumalanga (contributing 2.0 percentage points or R1 194.2 million), KwaZulu-Natal (contributing 1.9 percentage points or R1 111.7 million), North West (contributing 1.0 percentage point or R593.0 million) and Western Cape (contributing 0.8 of a percentage point or R476.1 million).

Stats SA notes that the biggest decrease was reported in Gauteng (contributing -2.0 percentage points or -R1 176.3 million), followed by Free State (contributing -0.9 of a percentage point or -R538.0 million).

The real value of recorded building plans passed by larger municipalities (at constant 2005 prices) decreased y/y 2.1 percent (-R870.2 million) during January to November 2011, which is attributable to a large decrease reported for additions and alterations (-14.4 percent or -R2 172.5 million).

Increases reported for non-residential buildings (11.9 percent or R1 023.9 million) and residential buildings (1.6 percent or R278.5 million) counteracted the decrease reported for additions and alterations to a certain extent.

The seasonally adjusted total real value of recorded building plans passed by larger municipalities increased by 0.3 percent during the three months ended November 2011 compared with the three months ended August 2011.

The only increase was reported for non-residential buildings (23.9 percent) and decreases were reported for residential buildings (-9.9 percent) and additions and alterations (-1.3 percent)

A large decrease was reported for non-residential buildings (-14.2 percent or -R1 546.1 million) and increases were reported for additions and alterations (1.9 percent or R199.4 million) and residential buildings (1.5 percent or R290.6 million) in the same period.

Six provinces reported y/y decreases in the value of buildings completed during January to November 2011.

These were 2.6 percent in the Eastern Cape (contributing -2.1 percentage points or -R850.8 million), Free State (contributing -1.6 percentage points or -R628.0 million) and North West (contributing -0.7 of a percentage point or -R301.9 million).

Increases were reported in KwaZulu-Natal (contributing 1.2 percentage points or R478.0 million), Gauteng (contributing 0.7 of a percentage point or R289.7 million) and Western Cape (0.5 of a percentage point or R215.6 million).

The reports notes that the real value of buildings reported as completed to larger municipalities (at constant 2005 prices) decreased by 5.9 percent (-R1 685.3 million) during January to November 2011 compared to the same period in 2010.

Non-residential buildings (-15.4 percent or -R1 199.5 million), residential buildings (-2.5 percent or -R340.6 million) and additions and alterations (-1.9 percent or -R145.2 million) all reported decreases.

Sibusiso Gumbi, Standard Bank property research analyst, says given the report it would seem construction continues to favour smaller stand sizes.

The seasonally adjusted real value of buildings reported as completed to larger municipalities increased by 1.9 percent during the three months ended November 2011 compared with the three months ended August 2011.

Stats SA says the biggest increase was reported for additions and alterations (5.6 percent), followed by residential buildings (5.1 percent) and non-residential buildings reported a decrease (-8.8 percent) in the same period.

Sibusiso Gumbi, Standard Bank property research analyst, says given the report it would seem construction continues to favour smaller stand sizes.

He explains that between January and November 2011, 17 894 units of less than 80 square metres were constructed, 8 893 flats and townhouses and 10 575 residential homes of 80 or more square metres were constructed.

Gumbi says this construction profile may be attributable to the availability of land and materials and the attraction of potentially lower running costs (under the assumption that smaller stand sizes attract lower property taxes and utility costs).

“Building activity is largely symptomatic of the weak housing market.”

He adds that as long as market and price activity remains languid, they do not foresee any material rebound in residential building activity in the near term. – Denise Mhlanga