Building plans passed May 2017 | Provincial summary

Although the May release of the building plans data from Stats SA marked the sixth consecutive month of decline, the rate of decline slowed to 1.8 percent y-y, from a decline of 33 percent y-y in April.  The contraction  in May is better than expected, and now joins other economic indicators that surprised on the upside over the last few weeks, such as slightly stronger manufacturing data as well as retail trade data, which saw an expansion in May of 1.4 percent y-y. Provincially it was a bit of a mixed bag with an increase reported in SQM approved in 4 of the 9 provinces. The Western Cape was however the only higher capacity province to experience some sort of growth in private building in the month. The residential market reported a marginal increase during May, while the non-residential market continued to decline, reporting the 6th consecutive month of contraction. Over the last 12 months, the rate of decline eased somewhat to -6.7 percent y-y, from -8.7 percent the previous month. Current activity is also starting to contract in terms of completions, which fell by 17.6 percent y-y in the month, and over the last 12 months, SQM completed contracted by 1.8 percent, and this is the first month

SQM approved in the residential market, increased by 4.4 percent y-y in May, compared to the same month last year. Be it marginal growth, it is much needed in a pretty stagnant sector. This was driven by a 3.9 percent increase in new residential construction, and a 5.6 percent increase in residential renovations. Most notable in the residential market was the star performer over the last 6 months namely flats and townhouses, which rebounded from negative growth last month, to an increase of 37.6 percent.  The annual growth over the last 12 months in flats and townhouses has outweighed the general trend and increased by 21 percent. Since last month, the 12 month rate increase has slowed from 24.3 percent in the previous month. There were declines in SQM approved for free standing dwellings bigger than 80 SQM (luxury homes), falling by 2.6 percent y-y. Low cost, or affordable housing contracted by 19.4 percent y-y in May. Looking at the longer term trend, there has been 4.5 percent less SQM of residential building plans passed over the last year, compared to the previous year, a 1 percent improvement from last month.

Approvals for private sector non-residential construction fell by 16.5 percent y-y in May, largely due to a decline in approvals for retail and industrial space. Approvals for renovations declined by 23.1 percent, which is the second month of decline on a y-y basis. All non-residential sub-segments reported fewer SQM approved in May this year, except for commercial spaces. The declines in SQM approved for retail and shopping centres continued, down by 22.4 percent in May, compared to the same month last year, but there were still more than 80 000 SQM approved, which is equivalent to a really large shopping centre, the calculation was done off quite a high base last year same time, where there were over 100 000 SQM approved in the same month. The star performer in recent months has been industrial and warehousing space, but the May data indicates that there have now been three consecutive months of decline in approvals for this category, contacting 13.8 percent in May. On the upside was a 15.1 percent increase in approvals for commercial spaces, with over 40 000 SQM approved.

Overall, the residential market subdued some of the big contractions in activity which we have seen throughout 2017 so far. The non-residential market has been driving the downturn in private building, with the residential market barely staying afloat. This marked the sixth month of decline overall, as well as the sixth month of decline in the non-residential market, faring worse than its residential counterpart.