Stats corner: Continued decline in building activity

Despite all the construction activity currently evident in many towns and cities across SA, and despite continued above-inflation increases in construction costs, the total value of buildings completed showed a year-on-year decline in 2024.

According to the StatsSA, the overall value of buildings reported as completed in the country's major municipalities fell by R5,6bn or 11,8% in the first 10 months of 2024 compared to the same period of 2023, with the value of residential buildings completed showing a 13,6% decline and that of non-residential buildings dropping by 23,8%. The only segment that showed an increase in the value of completions was additions and alterations, which rose by R932m or 12%.

And looking ahead, the slow-down in construction seems set to continue, with both the number and value of plans passed for formal new buildings having fallen in the first 10 months of 2024 compared to the same period of 2023.   

The overall value of plans passed by major municipalities declined by R3,79bn or 4,4%, with the value of residential building plans showing an 8,1% decrease year-on-year and that of additions and alterations dropping by 7,1%. The value of non-residential plans showed an increase of R1,68bn or 9,1%.

In the residential segment, the number of plans passed for formal houses smaller than 80sqm fell by 23,2% to just 5093 across the whole country, while the number passed for formal houses bigger than 80sqm fell by 8,1% to 9617. The number of plans passed for new flats and townhouses declined by 14,9% to 13 087 units.

This means that even if every one of these plans is translated into a completed formal dwelling over the next year or two, they will add a total of just 28 000 new homes to SA's real estate stock, and that is unlikely to cause a general oversupply that would depress real estate prices - except perhaps in specific areas where there is concentrated building activity.

This is good news for home sellers, but the continued decline in construction activity since 2019 is a ultimately a negative for SA. The building industry currently employs around 1,32m people (according to Statista) and is an important key to increasing economic growth and creating more employment. For example, every home built helps to create at least three more jobs in related industries - and to empower more South African families to get out of informal housing and rent or buy formal homes of their own.