Tuesday, February 17, 2009

Building Economic Trends 4th Quarter 2008

Photo Credit: Chothia on Flickr.com

In a quarter characterised by general downturn, there was good news coming from a lowering in fuel and power prices.

Interest rates declined, and this caused inflation to fall. Once all the data is available for 2008, inflation is expected to be 11.5% and for 2009 it should average 7%.

The two strongest sectors contributing to Gross Domestic Product (GDP) growth were agriculture and construction.

A survey of residential contractors indicates that business conditions are not likely to deteriorate further in 2009. There was a steep increase in the number of completed dwellings smaller than 80 square metres, showing that the State is still committed to the provision of low cost housing.

The same applies to the non-residential sector. Completed office and banking space increased substantially.

The additions and alterations market is buoyant, with an 80% increase in this area of activity in Kwazulu Natal compared to the same period in 2007. The only other province to rival this figure was Limpopo, with a 90% increase.

The commitment of many governments to the lowering of interest rates and other fiscal stimuli will, in time, assist the consumer, leading to increased demand and an upturn in the general economy. Already the housing experts are looking to the 3rd quarter this year as a turning point. The State is as committed as ever to infrastructural development, long past 2010, and of course to ongoing low cost housing provision.

Clive Hill
Financial Services Manager

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