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The number of residential building plans passed in the third quarter of this year was 21.88% fewer than in the same period last year, according to data released by Statistics SA.
Rising interest rates and a slowing economy have been dampening national housing demand recently, says John Loos, property sector strategist at FNB Commercial Property Finance.
Gauteng showed a -7.9% year-on-year decline in residential building plans passed for the third quarter, while KZN declined by -11.8%. However, the number of plans passed in the Western Cape during the third quarter was 36% higher than the same period last year.
Loos says the Western Cape appears on track to have the largest share of residential building activity of all nine provinces in 2022, despite Gauteng still by far being the largest provincial economy, and the province with the largest population.
"Relatively high levels of Western Cape residential building activity are not just about current 'semigrant' demand for homes. They point to a regional economy that may be moving into a period of significant outperformance economically compared to the rest, driven by decades of superior skilled labour attraction and retention," comments Loos.
For the first nine months of the year, the Western Cape's number of units of residential building plans passed has accounted for 37.8% of the national total, above Gauteng's 28.5% share. In third place was KZN with 13.2% of plans passed.
The picture was similar for residential buildings completed. The Western Cape had 43.8% of the national share in terms of number of units, Gauteng 33.3% and KZN 9.6%.
"The Western Cape has been building a brand as a well-run region with a great lifestyle, resulting in an ability to attract and retain better skilled labour than any other province. This may have set the stage for it even to start outperforming Gauteng in terms of economic growth, and thus have an outperforming property market too," says Loos.
