COST BETWEEN OLD AND NEW HOUSES RISES TO 16.5%

The price difference between old and new houses increased to 16.5% in the first quarter of 2009.  This is the largest price differential gap since 2004 according to an analyst in the latest quarterly ABSA Bulletin released recently.

In terms of the FNB house price index the change in prices for existing houses came in at minus 10.2% during the first quarter of 2009 and it is expected that existing house price deflation will continue during 2009 and the differential between input building cost inflation and existing house price deflation may only narrow towards the end of 2010.

This is bad news for developers and house builders and the implication is that profit margins will be severely squeezed during a period of rising building input costs during times of weak demand and tightening of mortgage bond financing.

VALUE OF RECORDED BUILDING PLANS PASSED DECLINES BY 35%

According to a news release issued by Statistics S.A the value of building plans passed by the larger local Authorities during the first quarter of 2009 declined by 35% compared with a year earlier.  The largest decrease was recorded for residential buildings at 46% then alterations at 9% and non-residential buildings at 14%.

Pieter Rautenbach | Projects Faciliator