Stats SA today reported just under 700 000 SQM of private buildings completed in September, which is a 7.4 percent improvement compared to the previous month, when 650 000 SQM were reportedly completed. Compared to the same month last year, activity levels in this segment is up by just under 24 percent, coming off a very low base in a pandemic ravaged 2020. As mentioned in previous reports, the 700 000 compares to an average of 940 000 SQM in 2019, before the pandemic and subsequent economic collapse, so the private building industry is operating at roughly 75 percent in September, of previous levels, which is very discouraging, but is very much in line with developments in the broader local economy, which is really struggling to recover to pre-pandemic levels, as the vaccination drive remains lacklustre and economic reform remains painfully slow. This is however a marginal improvement from the previous month, which is noted.
It was a marginally better month for the residential building industry with completions up by just over 2 percent, while it was an encouraging improvement for the non-residential industry, with activity levels up by 17 percent in September, with a long way to go to get back to ‘normal’ levels of activity.
In terms of building plans approved, which is a leading indicator of building in the pipeline, the figures remain a lot more encouraging if we compare to pre-Covid levels, and are much better than the SQM completed data. And in terms of the September data, there was also a bit of an improvement, with 4.7 percent more SQM approved compared to the previous month, at 1.17 million SQM. Again, we have not reached pre-Covid levels of approvals, with overall SQM approved at 98 percent of 2019 levels, which is much better, and the big positive out of the data is that approvals for residential buildings continues to operate at higher levels than in 2019, operating at 107 percent of average approvals, which is excellent and does show that there continues to be some pent up demand within the residential market. In terms of what is specifically driving the figures in the housing market in September is again the ’luxury’ housing segment, which saw year on year growth in SQM approved of 33.8 percent in the month, and was also higher than the previous month. Flats and townhouse approvals remained flat in the month, but low cost housing (or free standing homes smaller than 80 SQM) saw good growth of 70 percent y-y, with a robust 86 000 SQM approved.
It is however important to mention that just because a building plan is approved through a municipality, it does not necessarily mean that construction is 100% guaranteed, as in an uncertain economic environment, construction can often be postponed or cancelled, but it is of course still a necessary condition for building to happen in the first place, and does point to further recovery, even if we have to wait quite a bit longer than expected.
The industrial space segment gives the rest of the non-residential industry a bit of hope, with much better levels of approvals compared to the office and retail segments. In September, there were over 140 000 SQM of industrial space approved, compared to a very dismal 17 000 and 10 000 SQM of office and retail space approved in the month, which remains at shocking levels.
For specific figures on various segments, and a deeper dive into the data, clients can please login and download both the national and provincial dashboards by clicking the links below:
