NCA is shutting poorer buyers out
CREDIT HISTORIES The rich in SA’s property market are getting richer while the poor get poorer because of the way the National Credit Act (NCA) is being applied. So says Lew Geffen, chairman of Sotheby’s International Realty in SA, who says: “The wealthiest homebuyers — or actually those considered most creditworthy by the banks — often don’t actually need bank finance, and so are able to upgrade and invest now at good prices which will enable them to gain maximum advantage from the next market upturn.
“But the lack of access to credit because of the way the banks are applying the NCA is shutting poorer buyers out of the market and denying them the opportunity to build wealth through home ownership. The worst affected are black buyers who can afford monthly bond repayments but have not had time to build up extensive credit histories or asset bases that would make them better risks in the eyes of the banks.” In 2007 at least 25% of home sales by his company were to newly-wealthy beneficiaries of BEE. “But after the introduction of the NCA in 2008, the percentage of black buyers in traditional suburbs dropped back to 15% and now we are back at 5% — which is where we were in 1994.”