A total of 153 building plans were approved in January, representing a 32% m/m increase from the 116 building plans approved in December. In value terms, approvals increased by N$170 million from December’s N$100 million to N$269 million in January. January 2018 is getting off to a slower start in terms of the 153 plans approved, compared to January 2017 in which 171 building plans got the nod. In value terms however, January 2018 fared slightly better than January 2017, approving N$10 million more plans than the N$259 million approved in January 2017. For completions, the y/y statistic paint a rather skewed picture given that the increases are calculated off a rather low base. Looking from a rolling 12-month perspective, a 50% increase in the number of completions is more reflective of the state of building plan completions which equates to 640 worth N$674 million.
Additions to existing properties made up the largest portion of the total building plan approvals in terms of both number and value. For the month of January 129 building plans were approved worth N$233 million, 49% more in value terms than in January 2017, although the number of plans approved dropped by almost 10%.
New residential units were the second largest contributor to the total building plans approved in January. Approvals for new residential units for January 2018 were 32% lower than they were in January 2017. 17 new units worth N$25 million were approved in January 2018, representing a 60% decline from the N$62 million approved in the first month of 2017.
The number of new commercial units approved in January amounted to 7, valued at N$12 milion. Almost the same number of approvals in January 2017 were worth N$40 million. On a rolling 12-month cumulative basis, the number of approvals contracted by 35% y/y, a trend that has been on the decline since March 2016.
The 12-month cumulative number of building plans approved ticked up slightly in January with a 4.6% y/y increase. A total 1,903 building plans to the value of N$ 2.2 billion were approved and represents an increase in value terms of 4.7% y/y. The number of building plans approved, on a cumulative 12-month basis, has been on the decline for the greater part of 2017. Depressed consumer and business confidence are pronounced by economic indicators such as building plans statistics. Consumers and institutions are currently under pressure and this is further amplified by the slowdown in the extension of credit to the private sector. There is optimism that rests squarely on interest rates that might offer some respite to the consumers and corporates alike. Inflation has moderated well within the SARB’s target band and the new political landscape provides for greater market sentiment and belief that SA will not be downgraded by Moody’s. Coupled with the need to kickstart a much-desired economic recovery might just set the scene for interest rates to be cut in SA and thus affording BoN the opportunity to follow suit.