Whatshot

2025
2024
June
April
2023
March
2022
2021
2020
March
February
2019
December
November
October
September
August
July
June
May
April
March
February
2018
December
November
October
September
August
July
June
May
April
March
February
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
December
November
October
September
August
July
June
May
April
March
February
January
2015
December
November
October
September
August
July
June
May
April
March
February
January
2014
December
November
October
September
August
July
June
May
April
March
February
January
2013
December
November
October
September
August
July
June
May
April
March
February
January
2012
December
November
October
September
August
July

Property Talk

Property Talk

Author: Andreas Wassenaar
Date: 2018-05-04

It's an ideal time to secure an income producing property or a holiday home

Is it a good time to buy a second home The FNB Estate Agent Survey report on secondary home buying in South Africa provides some interesting insights and supports my contention that we are still firmly in the grips of a buyers market making it the ideal time to secure an income producing property or a holiday home at a drastically reduced price.

Despite the dramatic improvement in overall business and consumer confidence across the country in the wake of the change in the leadership of the ruling party, the economy is only expected to grow by 1,8% in 2018 (up from 1,3% in 2017). This will not improve the overall South African disposable income growth with households trying to keep their heads above water. This means that in general second home buying will be weak and this creates and sustains the excellent buyers market for a while. This will not go on forever and it is therefore advised to seize the buying opportunity while it is there.

Secondary residential property buying is currently, as of the 1st quarter of 2018, estimated at 12,96% of total home buying. This is slightly higher than the 11,99% recorded in the previous quarter. There are typically three key motives to buying a second home. These are the buy-to-let investment opportunity, the holiday home buying motive and the buying of a secondary home as a primary residence for a family member. The figures provided by FNB show that currently 2% of total buyers buy a second home for a family member and 3,18% buy holiday homes. This is down on the previous quarters estimate of 3,65% as well as down from the 3,7% recorded a year ago. The 3% level is on average relatively stable across this category.

The main category of secondary home buying is the buy-to-let market. This is currently estimated at 7,9% of total buyers which is down from the 8,55% estimated in the previous quarter and down from the 9,54% recorded in the same quarter a year ago. This single digit buy-to-let estimate has been typical since 2010 and creates the buyers market for this category.

The above 25% estimate experienced in the boom times of 2004 are unlikely to be repeated any time soon. Should this however occur it would be a selling signal to astute investors. As there is a good time to buy there is also a good time to sell. If you are able to position yourself to buy when most people are selling and sell when most are buying you would maximize your returns from your buy-to-let investment.

Currently FNB estimate that 4,46% of buy-to-let investors sell their properties due to lower than expected investment income. This figure is low compared to the 10,25% recorded in the 3rd quarter of 2010 and has been relatively stable over the past 6 years.

The total number of secondary homes owned by individuals is currently estimated by FNB to be 16,26% of total homes owned. The year-on-year growth has been close to zero at 0,12%. This further supports the contention that that it is an excellent time to buy an investment property.