Building industry shrugging off problems


Port Elizabeth - There have been continued signs of improvement in the construction of new houses in South Africa.

Latest figures show a much greater increase in the value of building plans for new residential buildings than activity in the rest of the economy during the first seven months of 2014.

It is also important to note that the latest growth in building activity follows on strong growth in the previous year as well.

This shows that the building industry is eventually shrugging off the problems associated with the crises in the property market in 2008 to 2010.

Statistics SA’s latest review of the number and value of building plans passed by larger municipalities shows that the value of building plans for new houses increased at 6% at constant 2010 prices during January to July this year.

Constant prices strip out the effect of inflation on building costs and basically show real activity in the building sector.

Currently, contractors will be working on houses to the value of more than R25bn (at current prices) if work on all the new houses has started.

The building activity boost in the residential sector seems to be driven by an increase in the erection of flats and townhouses, with more than 10 000 projects comprising nearly a million square metres of buildings under way across the country. The current value of these projects is estimated at R6.7bn.

Property developers seemed to have picked up the need for smaller free-standing houses. The number of plans passed to build houses of less than 80 m² has increased by 27% during the first part of 2014, compared to an increase of only 1.4% for larger houses.

Statistics SA says that local municipalities indicate that plans are not always submitted for low-cost building projects, and as such the number and value of many smaller dwellings are not included in its figures.

Western Cape and KwaZulu-Natal building companies will be the busiest, but the amount of work in Gauteng and the North West province has declined compared to the same period last year.

Unfortunately, there has not been the same growth in the building activity of new factories, commercial buildings and retail centres. Plans to erect new non-residential buildings have declined somewhat during the first part of the year.

Nevertheless, R14.5bn worth of non-residential buildings are in the pipeline.

Of these, most are for new office space. Plans have been approved for new offices comprising around 726 000 m² in total during January to July this year. The value of these projects is estimated at R5.7bn.

Far fewer shopping centres seemed to be planned now and figures show a decline of nearly 46% in new planned retail space compared to the first part of 2013.

- Fin24

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