The latest FNB/BER Building Confidence Index declined by four points to 38 in the second quarter, down from 42 in the first quarter. The reading means that more than 60% of respondents across the building industry value chain are dissatisfied with prevailing business conditions.
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Confidence across South Africa’s building sector weakened further in the second quarter of 2026, with growing geopolitical uncertainty and escalating input costs weighing heavily on construction activity and profitability.
The latest FNB/BER Building Confidence Index, released on Wednesday, declined by four points to 38 in the second quarter, down from 42 in the first quarter. The reading means that more than 60% of respondents across the building industry value chain are dissatisfied with prevailing business conditions.
The deterioration in sentiment was widespread, although the impact varied across sectors. Building material manufacturers and quantity surveyors recorded modest improvements in confidence, while architects, main contractors, hardware retailers and particularly sub-contractors reported weaker conditions.
FNB senior economist Siphamandla Mkhwanazi said the survey results pointed to a significant slowdown in activity after a strong start to the year.
Mkhwanazi said an overarching theme in this quarter’s results is the war in the Middle East, which saw input costs jump significantly between the first and second quarters.
In some cases, he said projects scheduled to commence were put on hold due to higher costs and general market uncertainty. Absent this shock, he said sentiment would likely have remained stable, if not improved on its first-quarter level.
The non-residential building sector, which had experienced a notable rebound since 2024, was among the hardest hit by the changing environment. Activity surged in the first quarter of 2026 but lost momentum in the second quarter as higher costs and uncertainty forced some projects to be postponed.
“Work in the non-residential building sector has gained momentum since 2024, albeit off a low base,” Mkhwanazi said.
“This momentum has been disrupted by higher internal costs – and greater uncertainty – linked to the war in the Middle East, leading to project postponements. Projects that are proceeding are also significantly less profitable than they otherwise would have been.”
The residential building market also remained under pressure. Despite earlier indications from building plans passed that residential activity could recover during 2026, survey respondents reported weaker levels of available work during the second quarter. Shifting expectations regarding interest rates have further dampened sentiment among builders and developers.
The challenging conditions are reflected in broader investment trends. In real terms, the total value of building investment contracted by 8.4% year-on-year in the first quarter of 2026, following a decline of 10.8% in the final quarter of 2025. The latest survey suggests weakness persisted into the second quarter.
Among the various sectors surveyed, sub-contractors experienced the sharpest deterioration. Confidence plunged by 17 index points to 35 as activity slowed sharply.
“This is in line with the weaker activity among main building contractors, but also likely reflects softer demand for smaller projects,” said Mkhwanazi. “These would typically be initiated by the homeowner or landlord who is now facing rising costs and cutting back on discretionary spending.”
The findings suggest that households under financial strain are delaying renovations, extensions and other smaller-scale building projects.
There were, however, some pockets of resilience. Architect activity remained relatively strong despite a slight decline from the previous quarter, indicating that interest in future building projects has not collapsed. Quantity surveyors reported stronger activity and saw confidence improve to 46 from 43, reflecting increased demand for cost management services in a volatile pricing environment.
“In an environment of rising and uncertain costs, it is not surprising that quantity surveyors are experiencing stronger demand,” Mkhwanazi noted.
Building material manufacturers also reported a rise in confidence, despite facing sharply higher production costs. Their confidence index increased by four points to 23, although sentiment remains at a low level overall. Hardware retailers recorded a slight decline in confidence but continued to report relatively healthy sales volumes.
The survey results underscore the fragility of South Africa’s building sector recovery. While interest in new projects remains evident in parts of the construction pipeline, escalating costs, reduced profitability and heightened uncertainty are constraining activity across the industry.
BUSINESS REPORT