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Residential projects passed, but investors wary

house building siteResidential contractor confidence fell in Q1 2017 on the back of weaker building activity and keener tendering price competition – in contrast to unchanged confidence in the non-residential building sector.

“For the past few quarters the trend in the residential building sector has been broadly up in terms of activity, while that of the non-residential contractors has deteriorated,” said John Loos, property economist at FNB. “This quarter, it seems that the residential contractor segment is also under pressure.”

According to the FNB/BER Building Confidence Index, business confidence among architects and quantity surveyors was above a level of 50, meaning both professions were at least optimistic in current circumstances.

“Activity at the start of the building pipeline remains reasonably robust, so it is understandable that the confidence of architects and quantity surveyors is above 50,” said Loos. “However, this may not necessarily translate into actual building work going forward.

“The continued activity at the start of the building pipeline, especially of architects, is cause for optimism. However, whether or not this translates into higher building activity in subsequent quarters depends on what happens on the broader economic and political front. Projects may be passed, but economic and political uncertainty may cause firms and individuals to hold back on investing.”

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