Hard hats on again

Residential property developers appear to be back in business after a five-year slump in home building activity.

In his latest outlook for the housing market, FNB property strategist John Loos says residential building completions are likely to surge by around 22% in 2015 (in square metre terms).

His forecast comes on the back of growing stock shortages and an expected rise in household disposable income levels. “After some years of very low levels of building activity, finally we believe that the time has come for more meaningful growth,” says Loos.

He notes that all the signs are there for a marked recovery in development activity. “Residential building plans passed were up 19,2% year on year in the third quarter while the FNB/BER residential contractors building confidence index has jumped from 58 to 69 points in the fourth quarter.”

Though the residential market is far from booming, Loos says the overall mood is positive. He notes that the recent drop in global oil and food prices could drive consumer price inflation sharply lower and household real disposable income growth higher, which should lead to further residential market strengthening and mildly higher house price inflation this year. Loos says house prices have shown a healthy recovery over the past three years. He expects average house price growth to accelerate to 8,7% in 2015, up from 7,2% in 2014.

However, he says the forecast