Increase in alterations and decrease in building of new homes
According to Statistics South Africa, there are two trends to emerge in the housing market. The first being the slowdown in the construction of new housing, and the second is that there is an increase in alterations and additions to existing homes.
The changing conditions in the property market are being put into perspective for CEO of the ERA South Africa property group after figures were released by Statistics South Africa. More homeowners are bringing about alterations and additions to their existing properties, many with a view to achieving a better selling price. The market is also moving into a stable state where developers are a little more wary about the number of new units they bring to the market.
Stats SA revealed that the number of residential building plans passed was down 10% y/y in January, while plans for additions and alterations were up 11.8% for the same time.
For a market that was growing by more than 30% y/y, Kotze believes that the classic demand-supply conditions will become more normalised alongside the stabilisation in price increases. He says that this can only be healthy for such a market and that the over-supply of newly built homes, where it exists, will gradually decrease.
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