Cancellations of building contracts, a dramatic decline in the number of non-residential building plans passed and the failure of some major residential developments have combined to place the building industry in a crisis that will lead to further job losses next year.

Contracts cancelled, a decline in non-residential building plans passed and the failure of major residential developments are some warning signals that the building industry is in crisis.

This is the view of Master Builders South Africa (MBSA) – an organisation that represents about 5000 building contractors in the country – who’s president Jean-Marie Talbot claims that government must now step in to save the industry.

Conditions in the civil engineering sector are just as tough where, according to Henk Langenhoven of the South African Federation of Civil Engineering Contractors, about 27 000 people have already lost their jobs because large-scale projects have been completed and there is no replacement work to keep them busy.

The MBSA believes that the problems facing the building industry are so severe that it is now necessary to convene a crisis summit early in the New Year to find some way to deal with the problems.

Talbot says that maladministration of construction projects, late payment for work done and delays in resolving final accounts and variations were all contributing to the problems facing building contractors in the country.

These factors are compounded by the lack of municipal infrastructure and service delivery from local authorities.

“There is evidence of the crisis in every sector of the property market where house prices have tumbled, mortgage advances have dried up and new building projects have come to a halt,” says Talbot.

Several residential estates have been placed in liquidation so far this year including the 185 hectare Sitari Fields Gold Estate near Cape Town. Last year 611 properties owned by Philken Construction in Florida, Ruimsig and Honeydew were sold on auction when the company went into liquidation.

The 700 hectare Highland Gate Golf and Trout Estate in Dullstroom was liquidated while six luxury properties in Sandhurst, Oxford Road, Morningside, Parkmore and Camps Bay were sold when MKB Properties Developments failed.

Absa’s Home Loans senior property analyst, Jacques du Toit says that the level of building plans passed and buildings completed were an indication that the building industry is currently facing a crisis, as these were significantly lower than previous years.

Du Toit says that the lack of building activity has a knock-on effect for material suppliers and other sub-contractors as well as for professionals including architects and quantity surveyors.

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I could not help but read with a smile on my face, the article over the uncertain future of the Building Industry, and with them being in crisis. Like the estate agents made themselves guilty of creating the false "property boom" so they could earn higher and higher commissions, and are not suffering from a situation of their own making, so too are the building industry. Whilst I feel great sympathy for the normal labour force that will always be the one to suffer when any company closes down, I feel a sense of "good riddance" when any of the owners and managers of building firms suffer huge personal loses. It is an industry fuelled by unscrupulous greed in the quest for higher and higher pay days. I have had very recent first hand experience of the greed within the building industry, so feel fully justified in my views.
We are currently in the process of having a very small addition done to our house. But to try avoid borrowing money to finance the addition, we will be doing the building in stages as finances allow. So for the first stage, we simply need the foundations laid, and plinth block-work and the concrete floor slap laid. We invited 7 local builders in our Cape Town suburb to come quote on the job. The cheapest quote we received was for R14,500. This quote separated the labour costs from the material cost, with the builder actually providing telephone numbers and contact names at the various suppliers for the materials. The quotes then escalated from there, right up to an amount of R67,000 for the exact same job!!!
We decided to go with a mid-range quote on the basis we did not want to run around sourcing the materials ourselves. These builders then delayed the start date 3 times, only to arrive on the 4th set starting date and inform us there had been a cost increase in materials and so needed to adjust their quote by R5,000..!!
So quite frankly, the building industry can slip into its own quagmire of greed. They have only themselves to blame. - Stephen Gohl