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Property Talk

Property Talk

Date: 2015-01-23

Holiday towns around South Africa have experienced a surge of buying. Those estate agents that service the holiday town residential market can testify to this increase in overall buying activity and FNB's recently released Holiday Town Price Index provides the stats to back up what the estate agents have been experiencing at the coal face of the industry. The 2014 year can be described as the year that the holiday town market bounced back in terms of price growth. The figures show that holiday town residential property price growth measured 6,5% in 2014 - the highest growth since the 14,9% rate achieved in 2007. It has been 7 lean years with slightly positive or negative growth rates recorded in the years between. Holiday homes are non-essential and secondary in nature and will therefore typically be more cyclical in nature than primary residential markets.

When things get tough, as they did in 2008 and 2009, everything that represents a non-essential luxury, such as a holiday home in Ballito, tends to come on the chopping block. Although the primary residential markets recovered fairly quickly in 2010, the holiday town residential market went from bad to worse between 2010 and 2013. Overall however the percentage of holiday home buying is tiny compared to the primary residential market. Over the past year the FNB Estate Agent Survey has recorded this as 3% of total home buying, which is higher than the mere 1-2% for the period 2010-2013. For those estate agents that live and work in purely holiday home towns, this has been the worst of times. Fortunately for us in the greater Ballito area we have an ever growing percentage of primary residential market buyers migrating into the area - either from a national aspect from Guateng and Pretoria or from a regional aspect from Durban-North and Umhlanga Rocks. This northern migration is inevitable as the King Shaka International Airport has redefined the economic hub within our greater Metropolitan area. The outstanding road infrastructure that currently links Durban to Richards Bay makes it easy for development to happen around this route.

A longer-term price performance analysis between holiday home towns and primary residential markets, taking 1999 as the base year, shows how close these markets have actually moved together over time. As the boom years accelerated from 2004 to 2007, the holiday town's price index exceeded the primary residential market price index. From 2009 onwards the primary residential markets dominated as holiday home sales stagnated and prices dropped. Since 1999 the FNB Major Metro House Price Index has grown by 443.5% while the Holiday Towns House Price Index has grown by 427.1% - only marginally less.

The prediction for the year ahead is that the holiday home market will remain constrained by the increasing administered costs associated with property ownership, being municipal rates, water and electricity. General economic growth will have to improve more significantly before major improvements in the holiday home market can be expected.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.


Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com