Update of Stats SA Building Statistics March 2012 Data Dr Johan Snyman Medium-Term Forecasting Associates STELLENBOSCH 17 May 2012 MEDIUM-TERM FORECASTING ASSOCIATES Building EconomistsTel: (021) PO Box 7119Fax: (021) STELLENBOSCH,

Vehicle sales show a V-shaped recovery, with a U-shaped revival in the case of residential buildings. In the case of BPP, Mar 2012 data were somewhat lower than Feb 2012 figures.

The trend in the cyclical movements correspond closely; vehicle sales in April 2012 were 9.2% higher than a year ago, with residential BPP 9% higher y-o-y in Mar 2012.

The year-on-year improvement in the annual percentage change of the number of houses (left-hand scale) is currently 19%, pointing to a revival, with interest rates still at low levels (right-hand scale inverted). Comparative base effects can explain the improvement in the BPP indicator

The mortgage rate is an important factor influencing the demand for housing. In the past, lower interest rates have boosted housing demand levels. During the current cycle, lower interest rates had little positive effect, because …

… the availability of housing finance was curtailed by the National Credit Act that was implemented in July 2007, and because …

… the banks applied stricter credit lending criteria during the recession. They currently view their lending criteria as neutral or “normal” given the prevailing monetary environment

In terms of (smoothed) numbers, private house plans in Mar 2012 were about 19% better than in Mar 2011

In terms of square metres, dwelling houses plans are still moving sideways

Data of townhouses and flats also show signs of a lacklustre performance, more than two years into the recovery phase in the overall economy

Average sizes are rising from 86 to 99 square metres

The building cost of townhouses and flats has risen rapidly in recent months to R per unit

Moving sideways …

It seems as if the lower turning point in offices has been recorded, but Mar 2012 data were lower than Feb 2012 figures

Office vacancy levels (vacancies line inverted) remain high at about 10.5% of available space

Since the low point recorded in April 2011, only a marginal improvement is evident, but Mar 2012 figures were lower than Feb 2012 data

The smoothed data for industrial buildings in Mar 2012 were just a little better than Feb 2012 figures

Industrial vacancies remain relatively high (vacancies line inverted, right-hand scale)

This unstable time series is still dropping

Total Building Plans Passed are still moving sideways … with real levels more or less on a par with those recorded a year ago

This comparison shows the relative performance of the various market segments since Long-term trends indicate a bottoming out of the downward movements (except in the case of shops)

This comparison of long term trends shows the lagged pattern. The residential sector is moving sideways, whilst the non-residential sector is still drifting downward, with the next upswing, long in coming …

BC is showing the normal lagged pattern

The BPP indicator showing the long-term trend has come out of a trough, but has since dropped sharply, with the lagging BC series approaching a trough

Both indicators are still reflecting a poor performance

Total BPP seems to be forming a trough, i.e. the movement is sideways, but for BC there is more downside potential …

Thank you for your attention … Johan Snyman