Mortgage rate rise knocks building industry.

Posted On Thursday, 12 December 2002 02:00 Published by
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Pretoria - Overall business confidence in the building industry had weakened during the fourth quarter of this year and tendering competition had intensified, according to the latest survey of the industry conducted by the Bureau for Economic Research (BER).
Pretoria - Overall business confidence in the building industry had weakened during the fourth quarter of this year and tendering competition had intensified, according to the latest survey of the industry conducted by the Bureau for Economic Research (BER).

Charles Martin, a senior economist at the bureau, said the 4 percentage point rise in the mortgage rate since the beginning of the year was clearly taking its toll on the industry.

Martin said building activity in the residential
sector was moderating and there was a reduction in available new work.

It was predicted that real fixed investment growth in this sector of the industry would slow further next year, but it should remain in positive territory.

Building costs, as measured by the BER building cost index, increased by 12 percent during the year.

The bureau has forecast that building costs would increase by between 7 percent and 9 percent next year in view of an expected slowdown in input costs and a keener tendering environment, which would exert downward pressure on profit margins.

Martin said business conditions in the non-residential sector continued to be less favourable than in the home building sector.

The bureau said business confidence in the civil engineering sector had declined marginally during the past quarter, but expectations were that it would improve moderately in the new year.

However, it said lower activity levels in the fourth quarter had necessitated a further reduction in the labour force.

Publisher: Business Report
Source: Business Report

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