The combined consequences of the recession, the National Credit Act and Eskom’s moratorium on the approval of new buildings have been disastrous. The residential market has been lifeless and the construction of offices and commercial buildings came to a complete standstill during 2009 as did the work on hotels, clinics and shopping centres. In this environment, Clay Brick industry sales dropped by an average of 20% - although in some regions this figure neared 60%.

OUTLOOK FOR 2010

At present, the outlook for 2010 appears more positive. Based on 4th quarter economic data, the world economy is emerging from recessionary conditions at a better than anticipated rate, due partly to the robust growth of China’s economy and the resulting increase in commodity prices.

The current macro-economic environment shows a marked improvement to that prevailing in early 2009. This is due to the March 2010 CPI declining to 5.1%, its 3rd consecutive month below the 6.0% upper inflation limit, and the prime rate remaining at 10.0%, a 30-year low.

In the building and construction industry, the FNB Building Confidence Index improved moderately from 28 in the 4th quarter of 2009 to 30 in the 1st quarter of 2010. The real value of building plans passed (BPP), a leading indicator for the building industry, reached a turning point in September 2009 and has trended upwards since then. Trends in building plans passed lead to changes in actual building activity levels by approximately 6 - 9 months.

Currently, activity levels in the private residential segment remain at a low level, with building activity mostly confined to affordable units below R700 000 and luxury residences above R4.0 million. The volume of projects being awarded in the public non-residential sector remains below expectations, with the exception of the Western Cape, where a number of hospital and clinic projects have been awarded.