Latest news with #SiphamandlaMkhwanazi
IOL News
a day ago
- Business
- IOL News
Sharp decline in building confidence index clouds South African construction outlook
Data from FNB/BER Building Confidence Index showed that main contractor confidence fell to 35 in 2Q2025 – the lowest level since 3Q2022. Image: David Ritchie/Independent Newspapers The FNB/BER Building Confidence Index has taken a significant hit, plunging five points to a troubling 36 in the second quarter of 2025 after a modest gain in the first quarter. The Index released on Monday characterises a construction industry at a crossroads, where the prospects of a recovery are overshadowed by a consistent drag from the residential sector. This latest reading revealed that nearly 65% of respondents in the construction sector expressed dissatisfaction with the current business conditions, raising red flags for the sector's health as the market grapples with both residential and non-residential challenges. Amid these struggles, the sentiment surrounding main contractors has reached its lowest point since the third quarter of 2022, dropping to a dismal 35. The decline has been primarily driven by an ongoing downturn in the residential sector, which has seen a dramatic drop in activity. Data from Statistics South Africa (Stats SA) indicates that real spending on residential buildings plummeted by 8.4% year-on-year in the first quarter of 2025. 'The residential building sector is under pressure,' remarked Siphamandla Mkhwanazi, senior economist at FNB. 'Respondents noted a deterioration in activity and overall profitability. Moreover, a deterioration in order books points to continued strain on activity over the short term.' Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ While the residential segment is faltering, the non-residential building sector has shown some resilience, remaining above the long-term average. According to Mkhwanazi, the non-residential building sector is now outperforming the residential building market significantly in terms of growth. He said this variance can be attributed to a low base caused by years of stagnation and a tangible recovery in demand for industrial and office space. Despite the overall dip in activity, there are glimmers of hope within the industry. The confidence index associated with architects remains significantly above average for the second consecutive quarter, although their business confidence remains stuck at a subdued 38. Meanwhile, sentiments among quantity surveyors have surged to 50, their highest level since the second quarter of 2017, buoyed by increased activity. 'Work at the start of the building pipeline is clearly gaining momentum. However, like with current activity, it seems as if it is largely focused on the non-residential sector,' Mkhwanazi said. 'Moreover, any progress in terms of building activity will be stifled by long delays in project approvals and client payments.' Nevertheless, the construction landscape is not without its complications. Long delays in project approvals and client payments are stifling potential progress, rendering the industry's recovery tentative at best. The downturn in confidence among hardware retailers has been particularly striking, as they experienced the most significant decline this quarter, shedding 24 points. This downturn came after last quarter's substantial increase in confidence and is attributed to deteriorating profitability despite robust sales volumes. Mkhwanazi cautioned that while retailers were optimistic about sales in the next quarter, the factors driving sales growth recently may wane, resulting in potential underperformance in the latter half of 2025. 'Although hardware retailers are upbeat about sales next quarter, it is useful to remember that some of the factors that contributed to better sales in the preceding two quarters, particularly the consumer income windfall from the two-pot retirement system, will likely be less pronounced going forward,' Mkhwanazi said. 'This could lead to a disappointing outcome in the second half of 2025, despite the recent interest rate cut by the South African Reserve Bank.'
The Citizen
15-05-2025
- Business
- The Citizen
House prices are rising in SA — here's why
Factors suggest a potential shift in demand towards more affordable housing options amid increased uncertainty. The FNB Home Price Index (HPI), released on Wednesday, indicates that houses in South Africa are becoming increasingly costly due to high demand. FNB reports that house values increased by 2.2% in April, up from 2.0% in March. The bank states that this is the fastest pace in approximately two years, since March 2023. Siphamandla Mkhwanazi, senior economist at FNB, attributes the growth in house values to improved demand. Not many people are buying houses According to information obtained from the Deeds Office, the number of people buying houses remains 16% below pre-pandemic levels. Mkhwanazi attributes this transaction volume to the slow market recovery since the pandemic. However, estate agents report an increase in positive sentiment, with activity ratings reaching a three-year high in the first quarter of 2025. 'Market outcomes are still modest, as reflected in slow transaction volume growth and slightly longer selling times (from 11 weeks in the fourth quarter of 2024 to 12 weeks and one day in the first quarter of 2025),' he adds. ALSO READ: Thinking of buying your first home, here are five key issues to consider Why are people not buying houses? Mkhwanazi says despite positive sentiment, there is still caution among buyers due to the impact of the pandemic-induced cost-of-living crisis, which has been made worse by global uncertainty. 'Many prospective buyers, particularly in the affordable segments, may still face significant hurdles in the home-buying process related to affordability,' he added. However, there is a demand for affordable housing in the country. In the lower-priced segments, potential interest rate cuts by the South African Reserve Bank (Sarb) and a potential 10% increase in the transfer duty threshold could stimulate demand. These factors suggest a potential shift in demand towards more affordable housing options amid increased uncertainty. Prices to increase by 3% by 2026 He says the recent dip in consumer confidence, due to heightened global and domestic uncertainty, is likely to disproportionately impact affluent segments, potentially leading to slower sales and price stagnation. 'With the HPI averaging 1.8% year-to-date, there is an upside risk to our 1.9% forecast for 2025. We currently project house price growth to approach the 3% mark by 2026.' NOW READ: Warning for South Africans buying homes
IOL News
14-05-2025
- Business
- IOL News
South Africa's housing market sees fastest price growth in two years
Homes are continuing to increase in value, with a gain in cost averaging 2.2% year-on-year in April, which is the fastest pace at which housing has become more expensive in two years. Image: Karen Sandison/African News Agency Homes are continuing to increase in value, with a gain in cost averaging 2.2% year-on-year in April, which is the fastest pace at which housing has become more expensive in two years. The April figure represents an increase from the 2% recorded in the FNB House Price Index (HPI) for March. FNB projects house price growth to approach the 3% mark by 2026. In 2023, South Africa's residential property market comprised 6.91 million properties and was valued at R6.789 trillion, City Mark data indicates. This is the latest information available to IOL. According to Statistics South Africa's latest General Household Survey, a typical South African household had about 3.2 members. More than three-quarters of homes had four to five members or fewer, while only 13% of households contained six members or more. Siphamandla Mkhwanazi, FNB senior economist, noted that information from the Deeds Office indicates that transaction volumes are about 16% lower than what was seen before the COVID-19 pandemic. This, he said, suggests a protracted recovery in market activity. Despite this, estate agents reported a surge in positive sentiment, with activity ratings reaching a three-year high in the first quarter of the year. 'However, market outcomes are still modest, as reflected in slow transaction volumes growth and slightly longer selling times,' he said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ On average, it took 11 weeks to sell a home in the last quarter of 2024, which has increased to 12 weeks and a day as of the first quarter of this year. Unsurprisingly, buyers are more cautious given the divergence between positive sentiment and market outcomes. This could be due to the ongoing impact of the pandemic-induced cost-of-living crisis, further exacerbated by global uncertainty, said Mkhwanazi. In addition, many prospective buyers, particularly in the affordable segments, may still face significant hurdles in the home-buying process related to affordability. The latest DebtBusters' Debt Index for the first quarter of the year showed that consumers had 53% less spending power when compared to nine years ago. Since 2016, electricity tariffs have increased by 135%, the price of petrol has risen by 88%, and the compound effect of inflation is 52%, DebtBusters pointed out. Mkhwanazi noted that the 'recent dip in consumer confidence due to heightened global and domestic uncertainty is likely to disproportionately impact the affluent segments, potentially leading to slower sales and price stagnation'. The FNB/BER's latest Consumer Confidence Index dropped to its lowest point since the second quarter of 2023 as of the first three months of the year. However, the affordable housing market could see higher demand should there be additional interest rate cuts by the South African Reserve Bank and a potential 10% increase in the transfer duty threshold. 'These factors suggest a potential shift in demand towards more affordable housing options amid increased uncertainty,' said Mkhwanazi. IOL
