January spike in new housing
Plan approvals up 37% nationally, 1 200% in East Cape
Activity in the new housing sector boomed in the Eastern Cape and nationally in January, with the number of approved building plans increasing by 37% nationally and more than 1 200% in the Eastern Cape. This is according to the latest Absa Residential Building Statistics, which is supported by data from Statistics South Africa (Stats SA). It also showed that along with the 37% year-on-year increase, the number of newbuild housing units completed during the same period rose by 23%. The latest data specifically concerns building activity in the South African market for new private sector-financed housing and does not cover commercial or governmentfunded building activity. The positive start to the year was confirmed yesterday by Nelson Mandela Bay conveyancer Greyvensteins Attorneys, which said that last month had been a record month for property transfers and new bonds. Absa home loan division property analyst Jacques du Toit said building activity in respect of new housing nationally started the year on a positive note, with both the planning and construction phases showing a significant improvement in the first month of the year compared with a year ago. “Building plans approved increased by 37% year-on-year in January, with the number of housing units reported as completed rising by around 23% from January last year,” Du Toit said. This translated into 1 176 plans in January last year against 4 356 plans approved in January this year. In the Eastern Cape, 70 building plans were approved in January last year, while a total of 921 plans were approved in January this year, representing an increase of 1 215.7%. Asked what effect he believed the percentage-point increase in VAT – to be implemented in less than two weeks – would have on the sector, Du Toit said: “An increase in the VAT rate will obviously add to the retail cost of building materials and services rendered by the building industry and related professions, which will have to be carried by the end-user of the products and services.”
The performance of residential building activity through this year would to a large extent depend on economic developments during the year and the impact of these on consumer and building sector confidence, he said. Aaron Cohen, of Port Elizabeth’s biggest residential property developers Cohen Property Developments, said the increase in VAT would have a dramatic effect on the sector as it would impact on all costs associated with new-builds, which would be passed on to the consumer. “We have enjoyed a solid start to the year and generally anticipate a good year going forward,” he said. “We are currently working towards producing around 20 new units a month in Port Elizabeth.” Negatives which could impact on the sector would include the new VAT rate and the government’s proposals for land expropriation without compensation, he said. “While there may be some undue concerns over the expropriation plans, it will certainly have an impact on the market with potential buyers now feeling uncertain and worried about any monies they plan to invest. “The bottom line is the expropriation proposals will, as we have already seen, impact on consumer confidence and will certainly not do the sector any good.” Greyvensteins director Liesel Greyvenstein said having researched and compared data as far back as 2014, last month had seen a record number of property transfers and new bonds. She said the VAT increase would have a nominal effect on people buying into new developments as they would not be subject to transfer and other costs. The good news for property buyers who had concluded purchase agreements (prior to April 1), but who had not yet had the property registered in their names, was that those purchase agreements would not be subject to the new VAT rate.