FNB/BER building confidence index gains four points to 45 in Q3

The FNB/BER building confidence index gains four points to 45 in the third quarter‚ indicating the sector is starting to turn itself around.

While it has improved from a dismal second quarter‚ the result still shows that slightly more than half of the respondents are dissatisfied with prevailing business conditions a level above 50 would indicate broader optimism.

The index shows the percentage of respondents who are satisfied with prevailing business conditions in six sectors architects‚ quantity surveyors‚ main contractors‚ subcontractors (plumbers‚ electricians‚ carpenters and shop fitters)‚ manufacturers of building materials (cement‚ bricks and glass) and retailers of building material and hardware.

The data did‚ however‚ show that confidence among main contractors rose to 53 index points‚ its highest level since the first quarter of 2008‚ leading analysts to believe optimism would rise in the coming months. "There are indications that demand for building work‚ especially residential building‚ should remain well supported‚" FNB property economist John Loos said.

The picture was more mixed on the nonresidential side of the market. "Retail sales growth has slowed significantly in recent times‚ restricting the scope for further new retail development‚ while the office property sector has had elevated vacancy rates for some time‚" said Mr Loos. Late in August research by Absa showed that the planning phase of residential building activity showed double-digit growth in the first half of 2014‚ but construction contracted.

The growth was mainly in small units‚ townhouses and high-density flats. "Against the background of trends in and prospects regarding the economy‚ household finances‚ and consumer and building confidence‚ residential building activity is expected to remain relatively subdued compared with previous years‚" Absa Home Loans property analyst Jacques du Toit said www.eprop.co.za