Building confidence increased to 41, meaning most building sectors remain dissatisfied with prevailing business conditions.
Building confidence in South Africa remained stable in the first quarter of 2025.
The FNB/BER Building Confidence Index, which indicates sentiment in the country’s building sector, gained one point to 41, a slight increase from the previous quarter.
It reveals the percentage of respondents satisfied with prevailing business conditions in architects, quantity surveyors, main contractors, subcontractors, manufacturers of building materials, and retailers of building materials and hardware.
The majority of respondents remain dissatisfied with prevailing business conditions.
“The FNB/BER Building Confidence Index includes revised calculations for building material manufacturers and hardware retailers in line with adjustments to the broader manufacturing and retail survey results.”
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Mixed results
Siphamandla Mkhwanazi, Senior Economist at FNB, said the first quarter’s results were mixed in terms of activity but, overall, reflected a sector that saw a slight worsening in current work.
“Contractors seem to be anticipating more work over the next few months, and this is partly a sustained sentiment.
“However, this does pose a risk to the business mood should these expectations not materialise, which our initial reading of the broader demand drivers suggests is possible.
“In addition, delays at municipal level again seem to stand out, in the comments to the survey — as a crucial hindrance to faster development, specifically in preparing work and plans for construction, further highlighting the risks to the optimistic near-term view.”
Changes to sentiment
He added that compared to the fourth quarter, hardware retailers gained nine points, quantity surveyors gained four points, building subcontractors gained three points, building material manufacturers lost two points, architects lost four points, and main contractors lost six points.
The index measuring activity among main building contractors eased in the first quarter of 2025, putting severe pressure on overall profitability.
“The latest data from Statistics South Africa (Stats SA) shows that the actual expenditure on building investment declined by 2.6% year-on-year (y-o-y) in the fourth quarter of 2024.
“This was mainly due to an almost 6% y-o-y fall in real residential building investment, while absolute, non-residential building investment rose by 4.7% y-o-y.
“The results for this quarter revealed that activity among non-residential builders continued to outperform that of residential builders, although both had worsened somewhat.”
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Residential sector still struggling
Mkhwanazi added that the industrial and warehousing sub-sector has held up well over the past few years, supporting at least some non-residential building work.
The index has shown signs of demand for retail space, and to a lesser extent, office and banking space is picking up, which supports non-residential outperformance.
However, the residential sector is still struggling despite the cumulative 75 basis points reduction in the repo and prime rate.
Despite a deterioration in activity and profitability, which weighed on sentiment this quarter, building contractors are optimistic about prospects for activity, employment, profitability and general business conditions next quarter. “
Other sectors’ confidence
He said business confidence for building sub-contractors increased to 42 due to higher activity.
Meanwhile, architect confidence declined for the second consecutive quarter to record 38.
“Better activity at the start of the building pipeline signals more building projects in the future and aligns with building contractors’ expectations of more work in the next quarter.
“However, architects increasingly consider municipal inefficiency, such as delays in getting building plans passed and approved, hindering business operations. This, in turn, weighs on their sentiment.”
Mkhwanazi added that activity among quantity surveyors worsened, but confidence gained four points.
At 59, hardware retailer confidence is at its highest level since the start of 2022. Continued sales improvement underpins the better sentiment.
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