06 Feb 2013
Holiday town housing markets may have reached some price stability in 2012, according to the FNB Holiday Home Market report.
The report reveals that when expressed as a percentage of total home buying the holiday buying component averaged around 2 percent in 2012, lower than the estimated 4 percent for 2007, but higher than 1.5 percent recorded in 2010.
Writing in the report, FNB household and property sector strategist John Loos says they estimate average prices for South Africa’s six metropolitan council regions and for towns deemed to be highly holiday demand-driven, based on Deeds Office data for transactions by individuals in residential areas.
He explains that for the past three years, average price growth in the major metro regions is estimated to have exceeded that of holiday towns, and in 2012 saw average price growth of 3.8 percent.
By comparison, the Holiday Towns Price Index saw small average price growth estimated at 0.9 percent in 2012 still seemingly lagging the major cities’ performance.
Loos says this figure was significant after having seen a decline of -5.2 percent in the average Holiday Town price of 2011 compared with the 2009 average level.
“The lagged impact of mildly improved holiday home demand, after the low of 2010, may therefore just have been sufficient to improve the market balance by 2012, and restore some price stability after a period of decline,” he says.
He points out that holiday town markets are still expected to lag the major city markets in terms of price performance for the foreseeable future, as a result of still-significant economic and household sector financial weakness.
In addition, many municipal rates and utility bills are rising steadily, making second homes significantly more costly to own and run.
“It remains a long way from the days of 2004 to 2006, when holiday town house price growth was estimated to have outstripped major city price growth.”
However, Loos says they should be expected to be more cyclical than the cities due to the non-essential nature of holiday home demand.
Many of their economies can be more cyclical too, due to corporates often centralising activities to larger centres in tougher economic times, as well as due to the cyclicality of tourism/getaway demand that often sustains such smaller town economies, he says.
Although still lagging the cities, holiday town markets seem slightly happier places to be as some semblance of price stability appears to have been reached, says Loos.
According to Kevin Engelsman, Seeff principal in Plettenberg Bay, holiday home buyers are back in force with a few high value properties selling for between R15.5 million and over R23 million, mostly to Johannesburg buyers, something that has not been seen much of in the last three years.
He points out that many holiday properties that have sold over the past year have been older homes that buyers are looking to renovate.
Another trend is that buyers are eyeing vacant land with plans to build their own holiday homes in future.
Sellers are also pricing their properties in line with the market and he says they expect holiday home buyers from Johannesburg and Cape Town to continue buying homes in Plettenberg Bay.
Meanwhile, Rawson reports that the Western Cape coastal areas are starting to see renewed demand for holiday homes in the area, particularly in the Hermanus/Onrus area where buyers have held back from buying second properties for a while.
Tony Clarke, managing director of the Rawson Property Group, says in the long-term Cape coastal properties have always shown a steady appreciation, however, currently, they have been discounted by between 15 and 30 percent below their previous peak prices.
In Jeffreys Bay, estate agents say the holiday market picked up to the extent that as much as 40 percent of sales and enquiries over December were for holiday homes, with many enquiries being from Gauteng and Free State holidaymakers looking to buy later in 2013.
There is also a demand for beachfront properties priced in the R4 million to R5 million bracket, according to the agency.- Denise Mhlanga
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