The South African property press, says Lanice Steward, managing director of Anne Porter Knight Frank, the Cape based estate agency, has "made a meal" of the Absa house price sales, reporting in a dismal way that year on year growth in the real (after inflation) price growth of middle segment homes slowed in the months up to September to 3%.

Some have described as disappointing because they had seen a marked recovery in prices in the second half of last year and the first quarter of this year.

But, says Steward, what the doom and gloom reporters completely overlook is that sales activity has increased significantly in the house sales market.

“If we compare the current scenario to that of 2007 we will find that there are useful lessons to be learned. In 2007 in Sea Point, to take just one example, at one time we were seeing prices doubling over twelve months even though sales had dropped by 50%.

"Obviously, therefore, reality had to return to the market - and it did with a big price crash.

"Now we are seeing the opposite: a big upswing in sales activity - the market is looking far healthier - which has not yet impacted on sales. Nevertheless, it is the sales activity which is the true indicator of the state of the market, not the current sale prices."

According to Propstats, said Steward, the increase in units sold in the Western Cape is already 33% up on last year and is showing all the signs of continuing to rise.

"What is more," she added, "all the evidence available to us indicates that sales activity would be far higher if only the banks would loosen up on their lending criteria. When the National Credit Act was introduced in 2005, it was by and large welcomed by the estate agency world as a prudent measure that would do away with irresponsible lending and it did not, in fact, impact too heavily on sales activity.

"Since the 2008 crash, however, many informed analysts in the property sector have begun to say that the banks are “hiding behind” the Act so as to limit their exposure - and, they say, the scorecard system of assessing a loan applicant results in many highly worthwhile, fully employed applicants not getting loans."

This, said Steward, is disastrous for South Africa’s economic wellbeing.

"If you go along with the generally accepted "rules" of every economist from Adam Smith to Warren Buffet, the same message is always there: foster homeownership so as to promote economic wealth in all your people. Where this “rule” is not observed, two things always follow. The first is that a vast group of those associated with housing - builders, surveyors, designers, maintenance men, electricians, plumbers, contractors, estate agents, conveyancers and others find themselves short of work.

"The second is that old people reach retirement still paying rents. This, in turn, means that either, as in much of Europe, they need large pensions or they become impoverished - as happens to so many of our lower income earners.

"It is time the banks once again accepted the all important role they play in the economy and realised that they must be more flexible in issuing home loans."

For further information contact Lanice Steward on 021 671 9120 or email lanice@anneporter.co.za.