Building cost inflation slows

PROPERTY STRATEGIST: John Loos. 30/08/07. © Unknown.

FNB property strategist John Loos says economic conditions are hampering the pace of residential demand. Business Day 2 June 2009, page 2.

John Loos. Business Day 7 September 2009, page 2.
PROPERTY STRATEGIST: John Loos. 30/08/07. © Unknown. FNB property strategist John Loos says economic conditions are hampering the pace of residential demand. Business Day 2 June 2009, page 2. John Loos. Business Day 7 September 2009, page 2.

First National Bank's (FNB's) Residential Building Cost Index for the second quarter indicates some further slowing down in residential building cost inflation, following a surge in building cost pressures last year.

First National Bank's (FNB's) Residential Building Cost Index for the second quarter indicates some further slowing down in residential building cost inflation, following a surge in building cost pressures last year.

"One should expect some slowdown, given that all indicators point to a general slowdown in the residential market after a minisurge last year. It is thus plausible that contractor pricing power is beginning to suffer moderately at the hands of rising interest rates and some consequent weakening in demand growth," says FNB property strategist John Loos.

Furthermore the strength at the lower end of the market, the result of property becoming less affordable during the boom years, may be an increasing incentive for a portion of development activity to shift away from the more luxurious end of the market towards the lower, less frills, end, he said.

The index reflects the average building cost per square metre. It excludes affordable and RDP housing. The average building cost per square metre was measured at R5,409 for the second quarter. This is up from the previous quarter's R5,003 per square metre. - I-Net Bridge

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