Housing uptick not enough to save building industry

Johannesburg – Industry leaders in the embattled construction industry have warned that the uptick in demand for housing is not the silver bullet the sector needs, but that the government needs to roll out its anticipated infrastructure programme.

According to the FNB House Price Index, the bank saw a 46% increase in the number of consumers who purchased a second property in the fourth quarter of 2020, compared to the same time in 2019.

However, said Business development manager at the Master Builders Association North Boitumelo Thipe, the uptick in demand was not being felt throughout the industry.

“Those contractors that operate in the domestic housing market are seeing some light, but the bulk of contractors do not operate in that space. Contractors working in the building space are also not seeing much upside given the reduction in demand for office space,”

Thipe said. “The engine for any meaningful revival of the construction industry, and the economy as a whole, is still government’s infrastructure rollout.”

Head of advice at Sasfin Wealth Johan Gouws said while the value of recorded building plans passed in South Africa rose 3.4% from a year earlier in March of 2021, those for the residential segment declined by 3.1%, again suggesting that increased demand for housing is not translating into work for contractors.

“Existing houses changing hands does not translate into construction opportunities, of course,” says Gouws.

“That could change if we start to see a demand for new houses as the so-called ‘post-Covid boom’ takes off. The Reserve Bank’s monetary policy committee is predicting growth of 4.2% for 2021, and with inflation under control and an aggressive cut in the repo rate to 3.5%, the outlook could look good for the economy in general, and construction in particular.”

The Department of Public Works and Infrastructure is developing the National Infrastructure Plan 2045, which will provide investors with a clear picture of the government’s infrastructure plans for the next 24 years.

The Black Business Council in the built environment is lobbying the government to introduce quotas in the multibillion-rand infrastructure outlay.

Article Source: Sunday World

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