"The Absa report makes it clear that this will be due to household credit growth remaining firmly in the single digit bracket this year," said van Alphen.
"Absa's figures", he said, "also show that year on year growth in private sector mortgage loans was 2,6%, while growth in outstanding mortgage balances was only marginally higher at 2,8% - obviously an unsatisfactory growth rate for an emerging economy."
The report, says van Alphen, also records that general loans and advances, credit card debt and overdrafts growth rates dropped to 7,7% year-on-year, and, as it always has to be accepted that in tight lending conditions, mortgages will always be held back, it is unlikely that we will see a significant increase in home financing for some time to come.
But, says van Alphen, these rather disheartening figures have to be assessed along with those from the major bond origination organisations, including Rawson Finance, which have all shown significant growths in turnover in the last year. Rawson Finance, says van Alphen, has seen a 35% increase in turnover year-on-year. How can this be explained in view of the uninspiring national figures for bond acceptances?
According to van Alphen, demand for home ownership, especially below the R1m mark, is at the moment very strong indeed, possibly at a higher level than ever seen before in South Africa. However, he says, a very high percentage of potential buyers have been having their bond acceptances rejected because they were putting in applications without fully understanding the criteria on which banks work.
"In situations of this kind", said van Alphen, "bond originators can perform a valuable role in holding back the application until the factors which might disqualify it, with their help, are rectified. As a result, companies like Rawson Finance, have been achieving a 65 to 70% acceptance rate - and the good news is that in the current situation, although roughly half the applicants are ruled out because of impaired records, 52% of credit active South Africans are assessed by the credit bureaux as being acceptable for a bond."
This, says van Alphen, is more than sufficient to keep the residential property market alive, albeit not booming and gives considerable hope that, with inflation reined in below 6% in 2015 and 2016 (as it is now predicted it will be), we can look forward to improved prices in house sale volumes and values from now on. For the foreseeable future these will, van Alphen agrees with Absa, be below 10% but, he predicts in 2015 and 2016, house prices could once more remain steady in the double digits bracket.
