Update on building confidence

by Tania Wannenburg
Update on building confidence

Despite lower confidence in the second quarter of 2016, higher activity by residential contractors and increased sales and production by manufacturers of building materials were surveyed.

The FNB/BER Building Confidence Index, issued by First National Bank in June, shows that building confidence in the second quarter of 2016 (2Q2016) fell with five points to 34, but there was a clear improvement in certain sectors, unlike the first quarter (1Q2016) that saw broad-based weakening.

The downside
All six sub-sectors surveyed, namely architects, quantity surveyors, main contractors, sub-contractors (plumbers, electricians, carpenters and shop fitters), manufacturers of building materials (cement, bricks and glass), and retailers of building material and hardware, registered lower confidence.

The largest drop was recorded among hardware retailers, which could indicate the end of the DIY boom, according to John Loos, property economist at FNB. The non-residential market also remains under significant pressure.

The positives
On the upside, building activity was marginally better compared to 1Q2016 and residential building activity rebounded nicely. Building activity/sales improved in the sectors of residential contractors and manufacturers of building material.

The Western Cape fared significantly better than the rest of the country, both in terms of confidence and building activity during the quarter.

“Developments in the broader economy such as higher interest rates, rising
household indebtedness and soft domestic demand will also weigh on the
building sector,” Loos adds.

Thanks and acknowledgement are given to FNB for the information provided to write the article.

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