The impact of the credit act 8 month on since inception has invoked mixed reactions from industry players in the real estate environment in South Africa. Although the stricter lending criteria has helped stem the flow of credit to unqualified consumers , and possibly averted an overheating credit crunch akin to the USA , the impact on potential home owners has been devastating.
What is the downside may be the question. Well in an economy that is attempting to redress a situation of the past where home ownership was the domain of an elite minority and under 20% of economically active citizens were contributing to the real estate market as home owners , you now have a check in this process that will have sever implications in the long term.
Home ownership is once again becoming the domain of the elite , and qualification is now even more stringent and out of reach than ever before in the history of real estate. This is creating a situation where those that may have bought and learnt the dicipline that home ownership and asset accumulation brings , now throw in the towel and rent. The excess income is more often than not directed to frivoulous spending rather than a long term saving strategy , and we now enter the realm of an economy that is not backed by fixed asset ownership , less wealth creation opportunities and certainly not a savings culture that we need to promote.
The impact of this act has been far too severe and should it not be revised or reviewed , it could cause a major backward slide in wealth creation opportunities for the majority of South Africans entering the economy and starting carreers as tax paying citizens in our economy.
Industry players and consumers should look a little deeper at the opportunities lost and the future implications before rolling over and accepting all the changes that we seldom get to even challenge. After all our government are only the custodians of the wealth that we create in our country and we need to ensure that our resources are well managed.