Value of build­ing plans passed down by 23.1%

Weekend Argus (Saturday Edition) - - PROPERTY - ESMARIE SWANEPOEL

THE TO­TAL value of build­ing plans passed by larger mu­nic­i­pal­i­ties d e c re a s e d by 2 3 . 1 p e rc e n t , o r R17.4 bil­lion, in the first 11 months of 2009, Statis­tics South Africa (Stats SA) has re­ported.

The largest de­crease was re­ported for res­i­den­tial build­ings, which fell by 38 per­cent, or R13.9bn, fol­lowed by non-res­i­den­tial build­ings, which fell by 10 per­cent, and ad­di­tions and al­ter­ations, which fell by 8.2 per­cent.

All nine prov­inces re­ported de­creases in the value of build­ing plans passed from Jan­uary to Novem­ber.

The big­gest con­trib­u­tors to the de­crease of 23.1 per­cent were Gaut­eng, which fell by 8.9 per­cent­age points, the West­ern Cape, which fell by six per­cent­age points, and KwaZulu-Natal, which fell by 5.2 per­cent­age points.

As­set man­age­ment and in­vest­ment firm In­vestec said that build­ing plans passed fell by 9.5 per­cent year-on-year in Novem­ber, com­pared with con­trac­tion of 13.6 per­cent pre­vi­ously, in­di­cat­ing that con­di­tions were still weak but slowly mov­ing to­wards sta­bil­ity.

The slow­down in the pace of con­trac­tion was ow­ing to an in­crease in ad­di­tions and al­ter­ations, which rose 15.2 per­cent year-on-year, while res­i­den­tial and non-res­i­den­tial plans con­tin­ued on the down­ward path.

Non-res­i­den­tial build­ing plans passed con­tin­ued to show that com­pa­nies re­mained cau­tious in the fourth quar­ter of 2009, cut­ting back on ex­pan­sion pro­grammes, and In­vestec group eco­nomics an­a­lyst Kgotso Radira said th­ese con­di­tions were likely to re­main un­til eco­nomic re­cov­ery got un­der way.

Radira said that the res­i­den­tial prop­erty mar­ket re­mained un­der pres­sure.

“The res­i­den­tial prop­erty mar­ket moves closely with the busi­ness cy­cle and will, there­fore, only re­cover once con­sumer con­fi­dence does, and when house­holds’ bal­ance sheets fully im­prove.”

In­vestec said the out­look for the construction sec­tor was “promis­ing”, but Radira noted that the pace of re­cov­ery would de­pend on the mag­ni­tude of the eco­nomic re­cov­ery and whether com­pa­nies con­tin­ued with their sus­pended ex­pan­sion pro­grammes.

“Sup­port for the sec­tor in the com­ing months will likely come from gover nment’s build pro­gramme, while pri­vate sec­tor work lags be­hind. We ex­pect the first in­ter­est rate in­crease in Oc­to­ber,” he said.

Al­though the econ­omy emerged from re­ces­sion last year, In­vestec ex­pected a mild im­prove­ment in eco­nomic ac­tiv­ity through­out 2010, he added.

This ar­ti­cle first ap­peared in www.en­gi­neer­

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