Builders’ confidence falls

2011-03-11 00:00

DESPITE the recovery of the wider economy, the building sector has retreated further into the doldrums, sinking to confidence levels last seen in the deep recession in late 2009 and early 2010.

Perhaps of more concern is the fact that there is no indication of when the sector will pull itself out of its unprecedented slump.

The latest FNB/Bureau for Economic Research building confidence index crashed to a level of 24 in the first quarter of 2011 from 38 in the final quarter of 2010.

This means that only 24% of survey respondents — architects, quantity surveyors, building contractors, building sub-contractors, building materials manufacturers and retailers — are satisfied with prevailing business conditions.

FNB chief economist Cees Bruggemans told The Witness yesterday that although the wider economy experienced an upswing 18 months ago, the fortunes of the building industry continue to decline.

“We are in uncharted territory and one has to recognise that there have been several structural changes to the economy, which will take time to work through.

“The building industry’s entire early revival has disappointed … and it’s pretty much across the board. This trend is pretty significant. Sub-contractors is the only category that showed some uptick.”

Bruggemans said the previous upturn was a prolonged upswing that continued for a lengthy period, but the environment has now changed.

“Access to credit and the cost of credit have changed and impacted on the sector. The electricity supply constraint is another factor that has held developers back. In the residential sector there is an acknowledgment that there is an oversupply of houses. It’s a tough adjustment and it is tending to be a long one. It may turn early next year.”

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