Building not recovering

Contraction in residential building activity continued unabated in early 2010, Absa home loans said on Wednesday.

Residential building activity in the South African housing market showed a significant contraction in January 2010 compared with a year ago, "despite indications that the pace of contraction slowed down towards the end of last year," senior property analyst Jacques du Toit said in a statement.

Earlier, Statistics SA released data showing the value of recorded building plans passed by larger municipalities (at current prices) for January 2010 fell 17.4 percent compared with January 2009.

The real value of recorded building plans passed by larger municipalities (at constant 2005 prices) during January 2010 decreased 20.5 percent.

Du Toit said the real value of building plans approved for new residential buildings in January this year was 12.1 percent lower year-on-year at R1.03-billion — compared to R1.17-billion in January 2009.

The real value in respect of residential buildings constructed was down a significant 43 percent year-on-year in January 2010, to a level of R875.9-million, from R1.54-billion in January last year.

The number of building plans approved for new housing was down in all three segments, houses, flats and townhouses, compared with a year ago to a level of 2483 units in January 2010 from 5535 units in the same month last year.

"This came to a drop of 55.1 percent year-on-year, or 3052 units on a year-on-year basis."

On the construction side, the volume of new housing units completed was down across all three segments of housing in January, by 52.6 percent year-on-year or 2507 units to 2255 units.

"These developments are an indication that the residential building and construction sector is still experiencing extremely tough conditions.

"Based on trends during the past year and into the early stages of 2010, positive year-on-year growth in residential building activity will not materialise in the short term."


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