25 Nov 2008
Is ownership of a holiday home a good investment?
Dina Porteous, area principal for Pam Golding Properties in the Margate area of the KwaZulu-Natal South Coast, says this issue is often debated and leaves prospective buyers in two minds whether or not they are doing the right thing.
"I can say it is one of the best investments that you can make provided that your intentions are that you have a long-term view on the purchase of such property. Look at it as a savings account and that you are building wealth through property rather than saving the money in the bank for your retirement," says Porteous.
"Many of our clients invest in coastal property with a view to retiring on the coast in their golden years and it works for them. If they make this investment in their 40's, by the time they're 60 they have paid off the bond and have a full paid home on the coast to which they can retire. The added benefit is that they will have had full use of this property over the past 20 years, during which time they have built up many memories of fun family holidays.
"For most people moving home or relocating is an emotional experience, however, this way it's really a home-from-home and as a result the move is less stressful. An added benefit is the fact that during your visits to the coastal home you have probably established friendships through the local golf, tennis or bowling clubs. You already know who owns the local supermarket and you know your neighbours.
"During this time your property has escalated in value and selling your house upcountry – or wherever your primary residence is located – provides you with the necessary cash flow to sustain yourself when you need it.
"As with anything there is an upside and a downside – so what is the downside of this seemingly good investment?"
Porteous explains that coastal property owners often complain that they spend all their holidays fixing up and maintaining their holiday homes. True, maintenance on the coast tends to be higher due to the climate and proximity of the sea – especially with respect to gardens, painting of exterior and interior walls, fencing and the like. She says when you buy in a sectional title complex the body corporate takes care of these matters your behalf, however it's also true that modern buildings are built using new components or materials created with the aim of reducing deterioration and thereby maintenance, so if your decision is buying a house then look for a recently built property as this has all been factored in. There are many good garden services on the coast and maintenance of a garden could prove to be less of a factor than may be anticipated.
Porteous says the following factors have always played a major role when buying a property and as with other forms of investment, supply and demand always influence price:
- Sea view coastal properties hold their value.
- Close proximity to a beach with sea view represents a sound investment.
- Coastal properties with easy access to amenities such as schools, hospitals and shopping centres have quicker turnaround times if you need to sell and therefore provide you with a better "exit" solution if for some reason you are compelled to sell.
- Look for an area that has its own Active Policing Forums and on the South Coast, areas such and Ramsgate, Southbroom and recently Uvongo have achieved major successes with keeping their areas virtually crime free.
- Look at the lettability of the property so that you could opt for a letting income should there be a need for it.
- Or look at a sectional title property with good letting income that could assist you with paying off your bond sooner - and when you ready to retire sell this property and buy your dream retirement home next to the golf course, for example, if you so wish.
- Stands in secure gated estates with sea views can be developed over a few years giving you an opportunity to create a property investment while enjoying the best of both worlds.
"I have witnessed extremely sound growth in regard to such properties. Fifteen years ago the same properties that sold for R250k are currently sold for R2,5m and more," concludes Porteous.
For more information contact Dina Porteous on 039 317 3003 or send an email.
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