Building cost database for South Africa – key data trends and implications

Abstract

The accuracy of any projections depends on the comprehensiveness of the report and the ability to gather appropriate data for the study. Inaccurate portrayals of any study will misguide the investor and result in project failure and loss of resources. Due to the current depressed state of the South African Economy, the construction industry’s value fell sharply and there was significant job loss. To help economic recovery, the South African government announced a ten-year infrastructure investment plan in housing among other sectors. The considerable deficit in infrastructure and housing in South Africa means that changes in building costs are important because of the implications of changes to affordability. This paper examines the trends in building costs in South Africa over five years and reconciles these indicators with other key socio-economic factors. The study analysed the indicators of Building Cost in the Medium-Term Forecasting Associates (MFA), Department Trade and Industry (DTi), and StatsSA database using descriptive and inferential statistics. The findings suggest a positive correlation between population growth, unemployment, poverty, and the growth in building costs. While it can be inferred that inflation and corruption have a negative impact on growth in building cost. The study recommends that investors should plan ahead and make projections on population, unemployment, and poverty to avoid project failure and loss of resources due to increased building costs.