"But with the banks now requiring minimum deposits of 25% on purchases of empty land, even creditworthy clients are being shut out of the market and developers are being forced to become bankers in order to get any deals done."
He says that a few years ago, when stands cost an average of R50k, a deposit of 25% was achievable, but with the average stand price now being around R500k, the deposit required is R125k, and that this is not attainable for most buyers, with the result that the "nursery" of the property market - the sector which attracts the most new entrants - has been brought to a virtual standstill.
"What is more, the banks' caution in demanding such large deposits is unwarranted. We are not living in the US where the sub-prime lending crisis has caused property values to drop so drastically. In fact, the latest figures show that values in SA have declined far less than 10%, so a 10% deposit would be more than adequate to ensure that there was sufficient value in the property to secure a home loan."
As it is, Nash says, there are many developers going out of business because they cannot sell their stands ? not for lack of potential buyers but because those buyers cannot access finance. "And then, when the banks which have granted the development bonds for those projects have to take them over, they are only asking for 10% deposits in order to get the stands sold as fast as possible and off their repossession books."
Meanwhile, there does not seem to be any consideration by the banks of the massive ripple effect that a slowdown in the housing market has on the overall economy. "When a development fails or is put on hold, it affects literally thousands of people downstream, from sales agents and conveyancers through architects, builders, designers and retailers right down to the workers that make bricks and build appliances and furniture.
"In fact, if the banks do not lend or make it impossible for potential buyers to access finance, their fear that values will fall is likely to become a self-fulfilling prophecy. They will effectively put people out of work and those without jobs will not be in the market to buy homes or land. Demand that is still strong now will dry up and then prices really will come down.
"And we believe we are currently in real danger of falling into such a downward spiral so we are appealing to the banks urgently and negotiating with them to get them to lower their deposit requirements without delay."
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