Tuesday, 05 March 2013 11:15

Industry shows signs of slow recovery

The Building Industry Bargaining Council (Cape of Good Hope) has published an industry forecast for 2013, updating their projections issued for the same period last year. The Council has looked at a number of reports and indicators such as cement sales, the repo rate, building regulations and the effects of these on the economy both at home and abroad. In a cautiously optimistic statement, Arnold Williams, Secretary for Building Industry Bargaining Council (Cape of Good Hope), said "There are definitely a number of indicators that are signifying a turnaround in the industry, albeit slow".

Marginal improvements have been reported by Stats SA, showing an increase of 1.17% in the residential sector, in terms of square meters completed in 2012. However, when taking into account square meters completed for flats and townhouses, this grew by a very healthy 18.57%. In addition, non-residential completed square metres are reported to have increased by 13.31% in 2012. Overall these reports indicate that the industry is definitely on the road to recovery, although the bleak global economic outlook will still have an impact on the industry.

Cement Sales were up by 2.9% at the end of the third quarter of 2012, a disappointing increase and much less than what was previously expected. These figures further disappoint when comparing to sales for 2011, which showed a slightly better increase of 3.2% over 2010.

Bond Originator Ooba reported an increase of 5.7% in bond approvals and said that 51% of bond applications are for first time home buyers, showing that the demand for housing is growing and this could be a good sign for the residential building sector in 2013. In line with this, it is a very positive sign that the reserve bank has once again decided to leave the repro rate unchanged, further boosting the residential sector.

The BIBC predicted last year that the changes instituted by the National Building Regulations in 2011 may dampen the market, due to raising building costs. "We expected the regulations to cause an increase costs but are pleased to say that we aren't able to find any negative indication of the real effects of these new regulations," added Williams.

Furthermore, it is a very positive sign that the FNB Building Confidence Index, which reflects the confidence of the role players in the building industry (residential and non-residential), was up by 6 index points (from 26 to 32) in the last quarter of 2012. This is mainly due to a high increase in confidence of the retail building sector. The index was at its lowest in June 1999 at 11 and peaked to 89 in June 2007.

"We believe that it is safe to say that the Western Cape building industry is on the road to recovery, but the upturn is much slower than what we had previously hoped for," concluded Williams.