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18 Apr 2018

Building update: In February, both building plans passed and completed rose on a y/y basis

Annabel Bishop

Chief Economist

Following strong growth in the non-residential category

Figure 1: Growth in the value of total building plans passed, completed in South Africa – constant prices (y/y %)
  • February’s real building plans passed jumped 10.0% y/y, after declining 4.0% y/y in January. This was primarily on the back of a strong recovery in the non-residential sector, which logged growth of 27% y/y after falling by over 33.0% in January (see figure 1).
  • Growth in the residential component of building plans passed achieved its second month of positive growth, albeit at a lower rate than January. This was after 5 consecutive months of year on year declines from August to December 2017.
  • Completions of buildings also rose markedly in February, growing by 14.4% y/y in real terms, after dipping by14.8% y/y in January. The residential component of buildings completed dipped for the third month in a row on a year on year basis, while the non-residential category climbed 84.5% y/y during the month.
  • The improvement in activity and indicated future activity in the non-residential sector is suggestive of a rise in sentiment as revealed by the BER’s latest business confidence and building confidence survey results.
  • The BER’s non-residential building confidence index rose to 41 in Q1.18 from 33 in Q4.17. According to their survey results, “(t) he higher confidence was underpinned by a sharp uptick in building activity - coming mainly from the main contractor segment”(see figure 2).
Figure 2: BER Building Confidence Index
Figure 3: YTD 2018 - Contribution to the % change in buildings passed at provincial level, current prices
  • For the year to date, the value of building plans passed at current prices grew by 8.4%.
  • On a provincial basis, the largest positive contributor to this lift, stemmed from the Western Cape region, which grew by 22.6% y/y during the period, yielding a contribution of 6.2% to the headline number. Gauteng, the North West Province and Limpopo on the other hand detracted from growth, yielding -3.7%, -1.5% and -0.5% respectively (see Figure 3).
  • During the same period, the value of buildings completed at current prices increased by 4.3% y/y, with the largest influence recorded, stemming from the North West region (see figure 4).
  • Strong global growth, coupled with improved domestic sentiment, following better than expected GDP growth and perceived higher political and policy certainty should drive fixed investment and therefore building activity going forward.
Figure 4: YTD 2018 - Contribution to the % change in buildings completed at provincial level, current prices
Figure 5: South Africa: residential building plans passed and completed: rand value (%, y/y)
Figure 6: South Africa non-residential buildings passed and completed: rand value (%, y/y)