Vehicle sales hit hard by new Credit Act
It's too soon to gauge the effect of the National Credit Act (NCA) on residential property sales, economists and estate agents say, although they think a slow-down is inevitable.
Vehicle sales have been hit by the act, but applications for home loans take longer so the effect on these is not yet clear.
Institute of Estate Agents of South Africa (IEASA) president Willie Marais said the industry would have a better idea in August of the impact on sales.
Marais's comments come after the motoring industry attributed a decline in new car sales to the NCA.
The National Association of Automobile Manufacturers of SA said that new car sales in June were 19 percent lower than in the same month in 2006.
"We can't really ascertain yet in terms of property sales, as it takes longer to get a home loan than car finance," said Marais.
He said that the "gut feel" in the industry was that sales would decline because applications were beginning to show a steady decline.
"Another thing is that June is a holiday month and business is a bit slower. But I agree with what I hear from economists. We should see more decline and fewer (home loan) applications in real estate," said Marais.
Bill Rawson, chairperson of Rawson Properties, said his group had noted that the market had begun to slow recently, but this could be attributed to a combination of factors, including the recent month-long public service strike.
"We're also noticing that consumers are scared to apply for loans, for fear of rejection, among other things. With the introduction of the act, consumers don't seem to know what to expect. We expect a lot more rejections," said Rawson.
Gina Schoeman, an economist at Macquarie Investment Bank, said the NCA had begun to hit car sales because applying for finance for a vehicle took less time than a house.
"Home loans take three months to process, so we'll only see a real picture after three months," said Schoeman.
MortgageSA has seen only a "marginal" increase in the number of loan applications turned down.
"It is too soon to compare approval data from (June) with previous months," said Kay Geldenhuys, the head of processing at MortgageSA.
"We expect approvals would have slowed (in June), but we see this only as a temporary phenomenon as consumers and banks alike get used to the new system."
Article from: www.iol.co.za