Absa has released its latest residential building statistics report – detailing how much it costs to build a home in South Africa right now.
The report found that there was a large increase in residential building activity in the first quarter of 2018, with the number of new housing units for which building plans were approved, increasing by 17.1% year-on-year (y/y).
“This growth was largely the result of trends in plans approved for houses smaller than 80m², which showed growth of 33% y/y, and plans approved for flats and townhouses, which increased by 14.7% y/y in the first quarter of the year,” Absa said.
However it found that the number of new housing units reported as being completed was lower in each of the three categories of housing in the first three months of the year – which resulted in a combined decline of 25% y/y.
This difference between the number of houses planned vs those which have completed construction is likely due to renewed confidence in the current economy.
Absa found that building material manufacturers, architects, quantity surveyors, building contractors and sub-contractors as well as hardware retailers, all reported improved business confidence in the first quarter of the year – but was still below the confidence-neutral level of 50 index points.
Cost of building
According to the report, the average building cost of new housing completed increased by 3.1% y/y to R7,360 per square meter in the first quarter of 2018, compared with R7,135 per square meter in the same quarter last year.
“In real terms, i.e. after adjustment for inflation, residential building costs were down by 1% y/y in the first quarter, based on an average headline consumer price inflation rate of 4.1% y/y over this period,” Absa said.
The average building cost per square meter in the three categories of new housing was as follows in January to March 2018:
- Houses of <80m²: R5,482 – up by 9.9% y/y.
- Houses of ≥80m²: R7,344 – up by 3.1% y/y.
- Flats and townhouses: R7,948 – down by 0.8% y/y
Alterations and additions
Absa found that building activity with regard to alterations and additions to existing houses was relatively flat in the first quarter of 2018, with the building area approved rising by 0.9% y/y and the building area reported as completed contracting marginally by 0.1% y/y.
“The building cost of completed alterations and additions to existing houses increased by 13.7% to R7,026 per square meter in the first quarter from R6,182 per square meter a year ago,” it said.
“In real terms, the building cost in this segment of the property market was up by 9.2% y/y in the first quarter of the year.”