Construction activity rebounds as building plans, home loan applications rise

Activity in the building and construction industry in South Africa is expected to continue gaining momentum for the remainder of the year due to the upward trend in the value of building plans passed.

This comes as mining and materials group Afrimat on Monday reported a sharp rebound in South Africa’s construction sector during the second quarter of 2025, with its Afrimat Construction Index (ACI) showing broad-based improvements across key indicators.

Compiled by economist Dr. Roelof Botha on behalf of Afrimat, the ACI measures activity in the building and construction industry.

Botha said the latest reading reflected a 6.8% quarter-on-quarter rise, outpacing national GDP growth.

According to Botha, the recovery of the ACI was, however, fairly predictable, as the indicators included in the index came off a low base recorded in the first quarter of the year. He said the further marginal decline in the prime overdraft rate during the second quarter also played a role in the improvement.

“A strong rebound occurred since the first quarter of 2025 for several key indicators, most notably the value of buildings completed, up by 21.7%, the sales value of building materials, up 13%, and the volume of building materials produced, up 10%,” Botha said.

However, Botha cautioned that year-on-year activity remained in negative territory.

Looking ahead, Botha said momentum was nonetheless likely to continue, especially due to the upward trend in the value of building plans passed, as well as the rise in the latest reading of the BetterBond Index of Home Loan Applications.

“The impact on the residential property market of the recent lowering of the country’s benchmark lendingrate has been reflected in the latter index increasing by 14% year-on-year during July and August,” Botha said.

“In the process, the number of home loan applications reached its highest level since the third quarter of 2022, when record high interest rates really started biting into the pockets of prospective homebuyers.”

Botha added that the residential property market was slowly but surely building up steam, which will ultimately benefit construction activity at large.

“The pace of further recovery in the construction sector will, however, only gain significant traction once the prime rate has returned to its level of 7% that existed immediately after the pandemic, and the government takes real action on vital infrastructure projects.”

From a business perspective, Afrimat has not really felt the impact of what the latest year-on-year reading of the ACI indicates.

Afrimat CEO, Andries van Heerden, said the company has managed to cushion itself against weak government spending by leveraging its diversified operations, including the successful turnaround of assets acquired from Lafarge South Africa.

“Given the success with the turnaround of most of the ex-Lafarge businesses, together with the contribution from our mining assets, Afrimat was able to counter the lack of infrastructure spending by the government,” Van Heerden said.

“We are starting to see early progress, with the rebuilding of the country’s rail systems, and this, along with the expansion of the electricity distribution network, bodes well for the future of our Construction Materials business.”

Focusing specifically on this segment of Afrimat, van Heerden said that with the acquisition and integration of the ex-Lafarge quarries, along with investments to address neglect and the completion of integrating information systems and management structures, the second quarter of the financial year saw improved operational efficiencies and increased profitability.

This was also aided by regaining market share previously lost when Lafarge began exiting South Africa.

“We got this right, through improved service delivery to customers who were previously neglected.”

Afrimat, which owns half of Transnet-approved quarries, said it is positioned to play a significant role in supporting Transnet’s infrastructure development and maintenance across all six major rail corridors.

The group continues to evolve its cement strategy, aligning with global sustainability trends and operational efficiency.

“We believe the traditional cement model is no longer viable in today’s market. By reducing reliance on costly and environmentally taxing components and incorporating extenders innovatively, we can supply compliant, cost-effective, and lower-carbon cement products to the market,” Van Heerden said.

BUSINESS REPORT