A total of 164 building plans were approved by the City of Windhoek in April. This is a m/m increase of 27.1% from the 129 plans approved in March and follows from two consecutive months of declines in the number of building plans approved. In value terms approvals increased by N$14.1 million to N$96.5 million, representing a 17.1% m/m increase in April. The number of completions for the month of April stood at 231, valued at N$55.5 million. The year-to-date value of approved building plans reached N$526.2 million, 4.1% higher than the comparative period in 2017. On a twelve-month cumulative basis, 1,937 building plans have been approved as at the end of April, an increase of 14.3% y/y. The 12-month cumulative value of plans approved reached approximately N$2.2 billion, an increase of 27.9%.
Additions to properties made up 127 out of the total 164 approved building plans recorded in April. This is a 19.8% m/m increase in additions from the 106 additions recorded in March. Year-to-date 470 additions to properties have been approved with a value of N$372 million, rising 35.2% y/y in terms of value.
New residential units were the second largest contributor to the number of building plans approved with 36 approvals registered in April, a m/m increase of 90% compared to the 19 residential units approved in March. Year-to-date, 96 new residential units have been approved, 4% less during than the corresponding period in 2017. In value terms, N$41 million worth of residential units were approved in April, 70% more than the N$25 million worth of residential approvals in March. The year-to-date value of residential approvals reached N$122 million, 32.6% lower than during the corresponding period in 2017.
Only 1 new commercial unit valued at N$8 million was approved in April, bringing the year-to-date number of approvals to 14, worth a total N$32.8 million. On a rolling 12-month perspective the number of commercial and industrial approvals have slowed to 51 units as at April, compared to the 61 approved over the corresponding period a year ago. The 12-month cumulative building plans approved within the last 12 months include a single project worth N$501 million and the average approvals in terms of value for this period was N$56.7 million. Excluding this single large project, approvals from a 12-month cumulative basis decline by almost 34% and indicates the generally low level of investment from the business community.
From a 12-month cumulative perspective, 1,937 total building plans have been approved by April, an increase of 14.3% when compared to the corresponding period in 2017. The 12-month cumulative number of approvals has been ticking up since December 2017 and does provide for an optimistic view for approvals to return to above the 2,000-mark, last seen exactly 2 years ago. Consumer and business confidence, as measured by the IJG Business Climate Monitor, fell slightly to 50.8 points in March from 50.9 in February. That it remains above the 50-point mark does signal that an economic turnaround could be on the horizon.
The interest rate environment has changed since the turn of the year. Monetary easing was widely expected to spur economic growth in 2018. This expectation dissipated with the market now not pricing in any more rate cuts in South Africa for 2018. What seems more likely at present is a possible rate hiking cycle, driven by recent rand weakness and an increasing oil price. These two inputs will weigh heavily on the SARB’s inflation expectations with risks being toward the upside, changing the narrative towards higher interest rates should inflation rise outside of the SARB’s target band of 3%-6%. BoN, which has kept its repo rate unchanged and simultaneously adding a 25bps buffer over the SA rate, is likely only to react if the SARB hikes rates beyond BoN’s current 6.75% repo rate. This effectively will offer no reprieve to consumers whom have been the biggest users of credit.
