Levels of residential building activity in the South African market for new housing improved in 2015, but growth remained relatively low at between 4% and 5% from the 2014 levels of activity, reports Absa Home Loans property analyst Jacques du Toit.
Growth in the planning phase of new housing, as reflected by the number of building plans approved by local government authorities, was in 2015 markedly lower than in the preceding year. The construction phase of new housing, i.e. the volume of housing units reported as completed, showed some growth last year after two consecutive years of contraction.
Residential building activity will continue to be driven by a growing population and number of households, but activity levels in the various segments of new housing will be influenced by macroeconomic trends and developments, household finances, lifestyle trends and consumer and building confidence. The outlook is for subdued economic growth of 0,9% in 2016, with consumers set to face increased financial strain this year on the back of rising inflation, higher interest rates and increasing property-related costs. These trends will have a dampening effect on the demand for and supply of new housing over the next twelve months and beyond.