Estate agents with little or no experience and the banks' extreme tightening on home loan lending are two factors destabilising residential property prices.

Consequently, current selling prices had been slashed to those of about three years ago, Chris Pearson, owner of RE/MAX said in a statement on Tuesday.

Pearson has urged the real estate industry's major players to use stricter vetting levels in the hiring and training of new staff and for greater lending realism on home loans from the major banks.

Pearson said the market, in part, was paying for the industry's many years of failing to train and supervise its staff.

"The man in the street often has a greater knowledge of property than some of the agents themselves," he said.

Pearson blamed unqualified agents for their inability to price correctly and to educate the seller.

He said these agents had "an overwhelming desire to justify their continued employment" to their employee by signing up overpriced sole-mandates regardless that it might seriously impair the seller's rights and that, because of its inflated price, was little more than worthless stock.

Desperation to 'fill desks at all costs' by principals meant the market had been beleaguered by the problem for years.

This was now seriously coming home to roost on the back of the banks' tightening up on their home lending, which Pearson said was rigid.

This combination was now mainly responsible for prices falling to those of three years ago, which Pearson warned could seriously harm banks if more homeowners fell into marginal negative equity situations.

Acknowledging the lending industry's long history of swaying from feast to famine in loan grants, Pearson believed its iron glove approach this time was 'over-reactive'.

He said South African banks should realise that there had been improvements in home sales in the US, UK, Australian and New Zealand markets.

There had also, globally, been a resurgence in first-time buyer activity in all markets.

"Our banks need to recognise this revival and their importance in regenerating our property markets not through high-risk lending, but through more balanced assessment of home loan applications even through the structuring of tailored packages to offset any of their perceived threats in the current market."

In keeping with most industry leaders, Pearson said the recent rate cuts by the SA Reserve Bank would 'soften some of the market's current brutality'.

However, he warned that 'true salvation' would only come from a strong shift in bank's lending attitudes.

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