18 Apr 2018
Building update: In February, both building plans passed and completed rose on a y/y basis
Following strong growth in the non-residential category
- 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).
- 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.