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22 June 2017

Residential building statistics
South Africa - Absa
Planning phase of residential building activity continued to contract while construction phase showed double-digit growth up to April 2017

Building activity in the South African market for new housing showed some diverging trends in the first four months of 2017. The total number of plans approved for new housing declined from January up to April from a year ago, whereas the number of housing units reported as completed showed some double-digit growth over this period. These trends are based on data published by Statistics South Africa in respect of building activity related to private sector-financed housing (see explanatory notes).

The number of new residential building plans approved declined by 7,5% year-on-year (y/y), or 1 315 plans, to 16 300 plans in the period January to April this year from17 615 plans approved in the corresponding period last year. The drop in plans approved occurred across all three segments of housing, although the segment for flats and townhouses showed a relatively small contraction of only 1% y/y, or 68 plans, to 6 567 plans approved in the 4-month period.

Growth in the number of new housing units built was recorded at 11% y/y, rising by 1 342 units to a total of 13 524 units in the first four months of the year. The segment for flats and townhouses showed relatively strong growth of 37,1% y/y, or 1 523 units, to a total of 5 623 units built over this period, with the volume of smaller-sized houses constructed, i.e. those with a building area of less than 80m², increasing by 13,3% y/y, or 580 units, to 4 940 units in the 4-month period. The segment for houses equal to or larger than 80m² contracted by 20,4% y/y, or 761 units, to a total of 2 961 units built since the start of the year up to April.
Building stats Apr 2017

HOA space registrations should be checked carefully
South Africa - IHFM
In typical Homeowners' Associations the various areas such as roads, the entrance and parks or green spaces within the development are split into categories: public open spaces or private open spaces and these various areas are often remain registered in the developer's name and are not transferred with the first transfer when the scheme is established. In some HOAs, the roads could be private roads, in which case the scheme is responsible for their upkeep and public, where the municipality would maintain and own them. Some of the spaces within the estate, such as parks or walkways, are usually private open spaces, which should be transferred to the HOA.

Attorneys should from the first transfer of a property in this estate transfer all the public and private open spaces to the HOA, but this sometimes is not done and could lead to cases where it is found that the municipal bills have been mounting up for these various areas over several years because they were never transferred, says Michael Bauer, general manager of the property management company IHFM.
HOA space registrations

Flat-line national growth comes alive
South Africa - PayProp
Over the last couple of quarters we’ve become so used to seeing flat year-on-year growth that we had to double-check if the graph below is correct – and it is!

With a newly re-weighted average, provinces with a higher contribution to the country’s GDP have a more discernible impact on average national rent growth. In the event, higher than normal year-on-year growth in Gauteng rentals from December to March was largely responsible for the spike over this period, along with double-digit growth rates in the Western Cape.

Was this a temporary spike or are we seeing a more robust growth trend? We’ll need a few more months’ worth of data to know for sure, but Gauteng’s rental growth recovery path will play a big role in a market revival.

If the spike is temporary, growth should again normalise to move with inflation. In the graph below, a clear positive correlation between the two is evident throughout 2016. If this relationship resumes and continues as before, rental growth should track above the 6% per annum mark later in the year, in line with inflation expectations for 2017.
PayProp

The gap widens between asking price and selling price
South Africa - ReMax
The differential between the listing price and selling price of homes in the current market can be as much as 30%. "There seems to be a large disparity between what sellers think their home is worth and what buyers in the current market are prepared to pay for homes, says Cameron Jansen of RE/MAX Central.

Buyers are aware that market conditions are in their favour and as such are looking for a bargain where possible, often putting in offers that are between 25% and 30% below the seller’s listing price," says Jansen.

He adds that this is not something that is unique to any particular price range, but rather across the board. "It is not that we just see the trend developing in one sector of the market - it is from one end of the market to the other, from the affordable housing sector right up to the luxury market," says Jansen.
The gap widens

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