South Africans who over-extended themselves financially got burnt when things started hotting up in the financial world. While the banking crisis is a distant memory for most, the scars of the fallout remain. Although the American and European markets appear to have borne the brunt of the credit crunch, South Africans have felt the effects and many are still trying to come to terms with the new approach to lending.The days of applying and receiving easy credit are a thing of the past. Although the general consensus is that South Africans were saved by the National Credit Act, in reality, the Act was only in existence for approximately 18 months before the collapse and therefore played a small role in the country’s economic crisis. That said, there are buyers out there that should be exceedingly grateful that they were barred from borrowing recklessly. As was seen by the American model, homeowners who were bonded to the hilt felt the full blow when the property market collapsed. Many areas including Las Vegas turned into virtual ghost towns as people literally locked up their houses, walking away from increasing financial pressures. The picture wasn’t much better in other countries and as the economic pandemic spread, property markets across the globe began to topple like dominos. Although there are a large number of homeowners who are battling to retain their homes, there can be little doubt that South Africans at least walked away fairly unscathed. There is a downside, however, and those who in the past would have found it easy to raise finance have found that the doors to credit have been firmly closed. Self-employed individuals in particular appear to be viewed with some suspicion and have to supply reams of paper work and extensive financial records both in their personal and business capacity. You can’t really blame the banks for taking a guarded approach as they themselves face stiff penalties if found guilty of reckless lending. The question that perhaps needs to be asked is how long the banks can hold off granting finance to well established, secure buyers? There is some good news in that banks have relaxed their lending policies to other sectors. Those who have saved a deposit are beginning to find it easier to secure finance and according to one bond originator, having cash on hand makes it easier to negotiate favourable lending rates. The fact that interest rates are the lowest in 30 odd years isn’t driving the market as much as the role-players would like. In a perfect world, buyers should be clamouring to get on board the property train. South African property bargains abound with agents in some areas reporting that the current prices are on a par with those last seen in 2005/6. Despite all of this, the market remains sluggish and generally speaking houses are taking longer to sell than before. The High Net Worth segment in particular remains flat, although, according to John Loos, a strategist from FNB, the Upper Income segment showed some summer improvement in demand, but remained lower than the Middle and Lower Income segments.The long-term effects of the fallout remain to be seen, but one thing, however, is pretty certain: the heydays of yesteryear are well and truly over and it is extremely doubtful that we will ever see the buying frenzy that once seemed to be the norm.