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The risk averse attitude of South Africa’s banks — not the recession — is the main reason why the housing market is still so sluggish.

"The demand for housing is there, but the finance is not," says Tony Clarke, MD of Rawson Properties. "The banks did exceptionally well of out of housing loans during the boom period of 2005 to 2007 — since then they have had a record number of bad debts, repossessions and mortgage loan readjustments.

"It is not at all surprising therefore that they are now risk averse. Keeping a close eye on the job and credit market, they know only too well how many people are losing their salaries and how many are dangerously in debt. In the circumstances, it is understandable that their goal now is to avoid any further losses and to rebuild profits — and we who develop and market property are not unsympathetic.

"However, the consensus of opinion now in the property marketing sector is that it is time the banks came back to the party, took a more lenient view and did their bit to revive the market by accepting buyers with stable jobs and good credit records."

Clarke added that this plea was not unreasonable because, "…the banks have to accept some of the responsibility for the current predicament in which the housing sector finds itself.

"Prior to the National Credit Act," he said, "they often threw credit at people with too little checking and investigation and, even now, there is evidence that in some fields, for example credit cards, they are still marketing their services very aggressively."

Home sellers, often desperate to get rid of their homes (and the monthly bond repayments), are sometimes achieving very quick sales, said Clarke, but, here again, they are hard hit by the current bank practice of charging high penalties for cancelling their bonds without giving the three month notice period.

"The only way out of this manifestly unfair penalty is to take another bond with the same bank, but that is just what those hard-pressed sellers cannot do.

"This too," said Clarke, "is seen by the property sector as another unfair imposition and further evidence of the banks’ cut-throat tactics.

"If the banks are to retain any credibility," said Clarke, "they must now show a change in attitude."

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Who is to blame for the sorry state of the housing market? Leave a comment below…

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