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Figure 35 above shows the Western Cape’s share of all residential buildings plans
completed in 2016Q1. About 35% of all residential building plans completed were from
the Western Cape for this period. It also shows slight growth (year-on-year) in the level
of residential buildings completed for the province, after the previous quarter’s decline.
This is as a result of the increase in the market share of flats and townhouses from 11.33%
of total building completions in February 2015 to 23.82% in early 2016.

Flats and townhouses look set to outgrow free standing homes during 2016. Dwelling
Houses Smaller than 80 square metres and Dwelling Houses Greater than 80 square
metres both saw their share in overall building plans completed decline in 2016Q1.

Affordable houses in the Western Cape are thus extremely limited and evidence of this
can be found in the fact that the number of residential buildings smaller than 80 square
metres completed in the Western Cape in 2016Q1 declined by 23%. Notwithstanding
the rise in residential unit plans passed and the increase in the market share of flats and
townhouses, the market is under-delivering new real estate stock.

Building plans completed data for 2016Q1 suggests that we may well see positive
growth in the number of homes completed, with the average size of homes declining.
This is also shown by the positive growth in building plans passed, which is normally
a leading indicator of square metres of completions to come. Construction activities
(housing supply) in the province have to increase to accommodate the increasing
demand and capital growth due to a growing number of buyers moving up into the
higher-value markets.
Another factor that has affected the housing industry in the province is the slow growth
in the economy. This slow growth has constrained job creation and negatively impacted
on household income, making it even more difficult for households to afford houses. Its
impact on the Western Cape construction and development sector has been two-
fold. Firstly, building costs have risen significantly, and secondly, affordability levels have
declined. Both make delivery more complicated.

Opportunities for the Private Sector
Considering all the facts discussed in this report, businesses, investors and property
developers should consider finding new ways to support the growth of affordable
housing in the Western Cape. This could be done by exploring and reconsidering
areas for new investment, expanding existing investment, or confirming the success or
strategic revision of ongoing activities.

Some opportunities are listed below:
• The Province’s residential property market is ripe for large-scale investment in the
affordable housing sector. With the proportion of households in the gap-housing
market in the province expected to grow from 36% in 2014 to 41% by 2040, the
possible areas for investment are in dwelling-houses less than 80 square metres,
and in flats and townhouses. There is also huge demand for rental housing situated
centrally, close to amenities and work, at an affordable rate for lower income groups.
Thus, enhancing the supply of new rental housing opportunities and encouraging
improved property management of rental stock should be encouraged.

72 QUARTERLY ECONOMIC BULLETIN 2016