Q: I have noticed on the way to work there about 4 or 5 " housing estates" being built but there has been no work on most of these sites for a few months now. I know the price of houses are ridiculous now, plus the interest rate doesn't help either. But then again, they are building a huge new "industrial' park in our area too and the building there is very busy every day. So, I was just wondering if anyone knows what is going on.
A: In the recent past, most private property developers would be able to sell their proposed units "off plan" largely due to the so called "property boom" and the fact that in the low interest rate environment there were many property investors in the market, the developer was then able to approach the banks to finance the construction of the units, after a certain percentage had been sold off plan (I think it's 30% or 40%, now that the units are not selling off plan any longer thanks to low consumer confidence, high interest rates and a slowing economy, they can now no longer approach the banks for project financing and the entire project becomes dormant while the developer attempts to reach the target percentage which is often difficult. As far as large projects are concerned, they will continue as normal except for the fact that Eskom is not issuing electricty certificates and cannot guarantee electricity supply to these projects, so yes, overall the construction industry looks set for a rough few years, especially in the private sector.