1. 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) 881-3887 PO Box 7119Fax: (021) 881-3887 STELLENBOSCH, 7599 E-mail: mfa@iafrica.com

2. 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.

3. 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.

4. 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

5. 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 …

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

7. … 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

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

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

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

11. Average sizes are rising from 86 to 99 square metres

12. The building cost of townhouses and flats has risen rapidly in recent months to R526 500 per unit

13. Moving sideways …

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

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

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

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

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

19. This unstable time series is still dropping

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

21. This comparison shows the relative performance of the various market segments since 1987. Long-term trends indicate a bottoming out of the downward movements (except in the case of shops)

22. 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 …

23. BC is showing the normal lagged pattern

24. 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

25. Both indicators are still reflecting a poor performance

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

27. Thank you for your attention … Johan Snyman mfa@iafrica.com