Mass housing ready to hit boom times

Pretoria - Despite billions being pumped into the construction of low-cost housing, the backlog persists at close to 2 million units, says Industry Insight, the construction industry information supplier.

However, there has been an improvement in the percentage of people living in informal dwellings, according to the firm's fourth-quarter report on the state of the South African construction industry.

It says the policies applied so far have not helped the broad mass of people. The housing needs of low- to middle-income home buyers were often ignored by developers in the recent boom period.

However, it says the low-cost and affordable housing sector may yet boom while the traditional residential market is experiencing a slump.

It says R39.32 billion of the government's R372 billion five-year infrastructure budget was allocated to this sector.

Industry Insight predicts that civil investment will rise by an average of 15.6 percent over the next four years, pushing overall investment in civil works to more than R200 billion during this period.

Investment growth through government-initiated projects is expected to surpass private sector investment, particularly with projects like the Gautrain and those of parastatals.

Provincial and local government corruption remains a key concern, the report says.

The report stresses that the dilemma of skills shortages in the industry cannot be resolved with any quick interventions, considering the three-decade recession from which the construction industry has just emerged.

At a glance

The 4.2 percent increase in employment in the construction industry is nothing short of dismal considering the rapid increase in investment in construction.

The market share of housing, previously at about 60 percent in 2004 and 2005, moderated to 29 percent in the third quarter of this year.

The house renovations market, which is highly sensitive to changes in lending rates, was 3.6 percent lower for the 12 months to August this year compared with the same period last year.

The outlook for the non-residential renovations market was less bleak, rising by 17 percent during the same period.

Water services and road construction contribute 50 percent of the total value of contracts awarded in the civil industry.

The value of road projects increased during the first three quarters of this year but water services dropped by 22 percent compared with last year, following a 17 percent reduction in the previous year.

Road construction is leading civil construction works, apart from the money spent on 2010, but there is a serious problem with the provision of water services.

Business Report November 6, 2007 - Roy Cokayne