3 graphs that show how houses are getting smaller in SA

The Standard Bank House Price Index has for the past few months revealed a deceleration in house price growth, due to subdued economic growth, rampant political uncertainty, and depressed business confidence.

The index shows that the affordable housing market (home purchases priced at R620,000 or less in 2017 prices and adjusted for inflation) has come under pressure, trending down, averaging 1.95% year on year in the second quarter of 2017.

“These consumers have been affected disproportionately by high food and fuel prices – averaging up to 34% of their monthly expenditure – as well as rising personal income taxes.

“However, this pressure is expected to ease as overall inflation continues to moderate, making room for further interest rates cuts,” the bank said.

Standard Bank said that from a supply perspective, building statistics continue to show relatively subdued building activity. Data from Stats SA shows that year-to-date (June), there were a total of 20,200 residential units constructed, unchanged from the 2016 total.

By category, there are however noticeable upticks in the construction of flats and townhouses (4.9%) as well as small houses (<80 square metres) (12%), compared to the same period in 2016, with the number of large houses constructed year-to-date down by 21.4% from 2016, it said.

The number of residential units in the planning stages continues to slow, with 4.55% fewer plans passed, compared to the same period last year, the lender said.

On a longer-term view, the number of new units constructed is only 54% of the total in the same period in 2007, when building activity was at a peak, or 20% below the long-term average – between 2000 and 2017 to date.

Standard Bank’s data correlates with a recent report from FNB, which showed that urban land scarcity has increased since the 1970s with average full title stand sizes having almost halved, building sizes having shrunk, and sectional title homes having become far more common.

Looking ahead, Standard Bank forecast continued growth in the remaining quarters of 2017, after news that the country exited a technical recession in the second quarter.  This growth will be assisted by a further moderation in food inflation, alongside monetary policy easing, as well as a sustained recovery in agricultural production due to better rainfall.

“We expect GDP growth to average 0.5% in 2017, with downside risk emanating from domestic policy uncertainty, political turmoil as well as depressed confidence,” the bank said.

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3 graphs that show how houses are getting smaller in SA