By Business Reporter
ACCORDING to Simonis Storm Securities, the construction sector will go into a recession in 2016 and that trend will continue in 2017 as Government continues to restore the fiscus.
This follows the City of Windhoek releasing its monthly building plans statistics for October.
The statistics (Windhoek building plans only) show that the number of building plans approved declined by 20.1 percent m-o-m to 191 plans approved in October 2016 compared to 239 plans approved during September 2016.
“Higher inflation, higher interest rates, slowing economy, pressure on the fiscus and slowing credit growth will lead to a recession in the construction sector and lower existing home sales,” Indileni Nanghonga, trainee economist at Simonis Storm stated.
The value of the approved building plans amounted to N$138.6million, down 13.5 percent m-o-m from N$160.3million in September. Additions accounted for 65.4 percent of the number of approved building projects in October. This category contracted by 25.6 percent m-o-m to 125 compared to 168 additions recorded in September. Houses, which is the second biggest component of buildings approved, dropped 10.0 percent m-o-m to 36 houses approved.
The value for additions contracted by 12.7 percent m-o-m and 18.8 percent y-o-y to N$51.1million in October. Despite the drop in the number of houses approved, the value grew by 45.9 percent m-o-m but recorded positive growth of 43.6 percent y-o-y to N$69.9million in October.
The number of building plans completed declined by 37.2 percent m-o-m and by 13.0 percent y-o-y to 27 building projects in October. Additions dropped significantly by 90.3 percent m-o-m to three projects completed compared to 31 completed in September. Furthermore, 23 houses and one commercial building were completed in October compared to 10 houses and 0 commercial buildings completed in the prior month.
“The number of buildings completed continues to decline while approvals have increased recently. This is a clear indication of a struggling construction sector in the Windhoek”.
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