Less stringent application of NC Act needed

Investec Group’s economist, Annabel Bishop, has predicted a 3,8% GDP growth over the coming year – a slight but significant upswing on the 2,8% of 2010.

“This,” says Bill Rawson, chairman of Rawson Properties, “could lead residential property marketers to think that a revival in our sector is on the way – and there are signs of this. However, the main factor still holding us back, as Gill Marcus, SA Reserve Bank governor, has recently pointed out, is the lack of capital spending, which fell 3,7% last year and which she rightly says is the prime reason for the poor GDP growth in 2010.”

This lack of capital spending, adds Rawson, is partly responsible for the dismally small number of building plans passed and the low M1 money supply – both mentioned in Marcus’ report.

“As this low capital outlay has been identified as the cause of so many problems,” said Rawson, “surely the logical next step is to take measures which, without being reckless, will free up the money supply, particularly to the house marketing and building sector, which are so important to the nation as a whole.

“The wise provisions of the National Credit Act and the general determination to avoid any sort of risky loans are commendable – and this has been said by most spokesmen in the property sector. However, South Africa has to get its housing sector active once again. With an estimated 34% of adult South Africans still out of work, and with thousands of people in all age groups (particularly among the young) yearning for a home of their own, the banks have somehow to be persuaded to lend the development and mortgage bond money, possibly with government help, on longer payment terms and at lower rates of interest. Homebuyers still waiting for the opportunity to invest but unable to get bonds need all the help we can give.”

As yet only some 55% of bond applicants, said Rawson, qualify for a home loan and agents are spending far too much time in trying to help borderline cases to access finance.

“Our franchisees tell me time and again that they come across many cases where hardworking, reliable citizens have had their bond applications turned down purely because of the stringent scorecard system applied by so many banks.

“Being prudent is all very well, and highly necessary, and we all do admire the government’s fiscal policies – but that kick-start to the free enterprise housing sector for which so many have asked is now overdue and can only take place if lending conditions are either changed or relaxed.”

Article from: www.rawsonproperties.com