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Growth in business confidence in the building sector appears to have been stymied by concerns about extortion as well as delays in municipal approvals.
That's according to FNB chief economist, Siphamandla Mkwanazi, following the release of the FNB/BER Building Confidence Index on Monday, which measures sentiment in the building sector.
The index rose to 40 points in the third quarter of 2024, from 35 in the second quarter, which still means that the majority of respondents were dissatisfied with prevailing business conditions.
"While the outlook for activity is encouraging, a number of constraints continue to weigh on sentiment in the sector.
"These include delays in municipal approvals as well as increased incidents of crime and extortion the sector. These will need to be addressed to ensure that projects can run unhindered, and can be completed in time and in budget," Mkwanazi said.
He added that had it not been for these constraints it was "likely that sentiment would have risen by much more than it is currently reported".
However, Mkwanazi says the building pipeline suggests that there is good cause for optimism regarding the medium-term prospects for the building construction sector.
Meanwhile, Mkwanazi said while overall building activity was relatively stable during the quarter, the residential sector continued to underperform.
"This weakness in the residential building activity reflects downbeat trends in the housing market.
“Moreover, the cessation of load shedding since March has reduced demand for residential energy installation, which was an important source of work for the sector in the recent past," he added, saying further that demand for non-residential buildings fared better, albeit off a low base.
Mkwanazi said the survey also noted an interested "marked" rise in architect, and to a lesser extent, quantity surveyor activity which he said suggests that building demand is increasing which will likely support building work in the coming quarters.
