The building sentiment measured by the FNB/BER building confidence index has improved slightly from 40 in 40 to 41.
Source: Supply. Siphamandla Mkhwanazi, Senior Economist: FNB.
Current reading means that a majority (almost 60%) of respondents are unhappy with common business conditions.
Compared to 4Q2024, the following changes in sentiment were registered, including hardware retailers (+9), quantitative surveyors (+4), building subcontractors (+3), building materials manufacturers (-2), architects (-4), and key contractors (-6).
After registering strong improvements in 4Q2024, the index measurement activity of the main building contractor was eased in 1Q2025. As a result, the overall profitability was under severe pressure. This put a pressure on the emotions by losing 6 points to register a level of 45.
Latest data from the South African Statistics Agency (STATS SA) shows that real building investment spending fell 2.6% (YOY) from the previous year in 4Q2024. This was mainly due to a year-on-year decline of almost 6% in actual housing investments, resulting in an increase of 4.7% in actual non-resident construction investments.
Non-residents will again outperform
The results for the quarter revealed that activities between non-resident builders were superior to those of home builders, but both were slightly worse. “The industrial and warehouse subsector has been well maintained over the past few years, supporting the work of at least some non-resident buildings.
“Now we are seeing signs that we are picking up demand for retail space, and to a lesser extent, office, bank space, as well. This further supports non-resident outperformance. In contrast, the housing sector has struggled despite cumulative 75 basis points reductions in repos and cumulative 75 basis points reductions in prime rates since the end of last year.
Despite the declining activity and profitability that has been felt over the quarter, builders are optimistic about their outlook for activities, employment, profitability and general business terms for the next quarter. “This kind of optimism is encouraging, but there is a risk that emotions will drop even further if these expectations are not realized,” warned Mkhwanazi.
The business building subcontractors has been more trusted this quarter (up to 42) due to higher activities.
Architect Sentiment Drop
Architecture's trust fell for the second consecutive quarter to record a level of 38 in 1Q2025. Emotions moved lower despite increased activity.
“The better activity pipeline at the start of the building signal more building projects in the future and is consistent with the contractor's expectations for more work in the next quarter. However, architects are increasingly considering the city's inefficiencies, such as delays in passing and approving the construction plan, which in turn is squeezing their feelings,” Mkhwanazi said.
In contrast to architects, activities among quantitative surveyors deteriorated, but reliability scored 4 points.
At 59, hardware retailers' trust is at the highest level since its launch in 2022. According to Mkhwanazi, “Hardware components in the retail sector performed poorly in comparison to other retail spending categories last year. However, sales in the last two quarters benefited from low interest rates and an inflationary environment, as well as financial crashes to households from retirement reform.”
The feelings of building manufacturers fell two points in 1Q2025 despite increased activity as production costs jumped sharply.
Building confidence and stability
In conclusion, the FNB/BER Building's confidence index remained relatively stable in 1Q2025, scoring 1 point to a level of 41. However, the short-term outlook for the work is encouraged from the expectations of both contactors themselves and the better activities reported by architects who reflect the architectural pipeline.
“Contractors appear to be expecting more work over the coming months, which is partly emotional. However, if these expectations don't come true, this poses a risk to the business mood. Furthermore, comments on the survey appear to once again stand out at the local government level as comments on the survey, particularly in highlighting the risks to work and construction plans preparation and the short-term views of optimism.
The first quarter survey fieldwork was conducted between February 5th and 24th, 2025.
