New residential buildings in South Africa are falling short of demand, according to Jacques du Toit, senior economist at Absa (Amalgamated Banks of South Africa).

Writing in Absas Property Trends Publication, Mr du Toit highlights the strong increase in building costs compared with consumer inflation as an indication that demand for residential property remains strong. However with the increase in the cost of production outweighing real value of homes, fewer properties are being delivered, despite a large number of building approvals being granted.

"This relatively strong increase in building costs compared with inflation is a reflection of the continuing strong demand for residential property