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Where in South Africa should you invest in a holiday home?

16 Nov 2018

The stresses of work, city living and simply the ongoing ‘daily grind’ sees many people looking to realise their dream of owning a holiday home where they can kick back and unwind with family and friends on weekends or longer getaways - or ultimately, even relocate.

This two bedroom, two bathroom house in Knysna, Western Cape, offers a balcony and gorgeous lake views. It is on the market for R5.7 million - click here to view.

According to FNB, house prices in towns typically considered holiday towns continue to accelerate quite strongly - possibly because a growing number of young people are turning to these smaller towns for their permanent homes as they offer more affordable accommodation, less congestion and increasingly, educational facilities such as private Curro schools, says Sandra Gordon, Pam Golding Properties senior research analyst.

“So we are seeing the transformation of holiday towns and hamlets as people increasingly opt for coastal living, which means that if you are buying a home in these towns for use as a holiday home, you have the potential to benefit from the increase in prices as people opt to move there permanently. Worldwide, well-located coastal property is limited in availability, which increases its desirability, and potentially its value,” says Gordon.

This six bedroom, six bathroom house in Port Shepstone, KwaZulu-Natal offers a verandah, built-in braai and spectacular views of the ocean. It is on the market for R2.8 million - click here to view.

To ensure you make a wise acquisition that will bring you years of leisure enjoyment and a sound investment, and perhaps even a home to retire to in the future, Gordon shares a number of useful aspects to consider:

1. Put family first

Firstly, make a list of you and your family’s own requirements, say Stef Nel and Mohammed Amra, Pam Golding Properties area principals in Scottburgh and Port Shepstone respectively, on the tranquil KwaZulu-Natal South Coast, an affordable and sought-after location for leisure getaways, including homes to retire to.

“Ensure there are activities the whole family can enjoy. Keep a look out for restaurants, animal parks, beaches, hiking routes, fishing spots, adventure sports and other fun holiday activities, as well as convenient shopping malls,” says Amra.

2. The importance of location

Then there is location, says Nel. “Is the property within easy reach and in a destination you would want to visit regularly, and is the cost of the transport to and from within your budget? Our location is increasingly sought-after among families wanting to be near parents residing in the ever developing retirement facilities on this coastline,” says Nel.

This newly-renovated three bedroom, three bathroom home in Knysna, Western Cape, offers a lovely garden and two patios. It is on the market for R3.35 million - click here to view.

“Depending on your own requirements and personal interests, is the property accessible from a distance perspective, and also within easy reach of the leisure activities available?”

For example, if it’s within walking distance of the beach, river or lagoon with shops and restaurants nearby, this will add to the appeal, not only for you, but also for a future investor or buyer, ultimately adding to the value of the property. If it’s not too far from where you live, you can have short breaks more often and invite relatives and friends for occasional visits, while teenage children will be prepared to come along if they can stay for short periods and return easily to their friends and activities, says Nel.

3. Lifestyle

“Bear in mind your holiday home needs to allow for growth and fit into both your current and future lifestyles,” says Amra.

“Large open-plan areas are perfect for relaxing and family entertainment,” says Ling Dobson, area principal for the company in Knysna and Plettenberg Bay.

This four bedroom, four bathroom home in Plettenberg Bay, Western Cape, offers a wooden deck, entertainment area and forest views. It is on the market for R9 million - click here to view.

“And,” points out Richard Arderne, area principal in St Francis Bay, “with our amazing water sports right on your doorstep, you will probably want to enjoy the convenience of being able to walk into your home with wet, sandy feet, so check that the floors are geared for this.”

4. Ease of access

Accessibility is key, says Nicola Lloyd, Pam Golding Properties area manager in Hermanus and Onrus in the Western Cape. “Understand how often you would like to make use of your holiday home and what your long-term goals are. You may be looking for an easily accessible regular weekend getaway or a more distant holiday home to use for longer periods. Or you may be seeking a holiday home with potential for permanent living in the future. Also, get to know the area and its weather influences well before you commit to a specific location and site, and establish if the area faces north or south to enjoy the best orientation.”

“Here you can enjoy the best of all the water attractions as you can be positioned within walking distance of the beach, river or canals, so you don’t even have to drive while on holiday. Find a home with a sheltered patio and braai area and a lawn where your children can play, situated in a quiet street,” says Arderne.

This three bedroom, three bathroom home in Hermanus, Western Cape, offers a beautiful garden and mountain views. It is on the market for R7.855 million - click here to view.

Location and position of the property within the area of your choice is particularly important if the home needs renovation, which requires additional capital investment, says Erika van der Westhuizen, Pam Golding Properties area principal in Hartbeespoort Dam.

5. Choose an affordable home

Affordability is a critical factor, so remember to take into account the fact that there are property cycles and periods where interest rates may fluctuate, adds Nel.

Check the popularity and price growth in the area you are looking at buying into, says Amra.

“Not all areas are on the up and up, so ensure you do your homework as you don’t want to invest in an area where house prices may not be appreciating in value. Also look further than the cost of the property itself - don’t forget to consider costs like furniture, should it be acquired unfurnished, as well as electricity, water, rates, taxes and levies.”

6. Lock-up and go

Security is important, especially if the home will remain vacant for lengthy periods, so it’s advisable to look for a lock-up and go property which is easy to maintain, such as within a sectional title complex, as then security and external maintenance are taken care of by the body corporate.

This three bedroom, three bathroom home in Onrus, Hermanus, offers private garden and is close to amenities. It is on the market for R2.95 million - click here to view.

Before you buy, check that the complex has effective management in place, a healthy track record and sound financial records.

Is the house easy to maintain? Amra says when looking for the ideal holiday home, a big plus is a lock-up and go type home. Be sure to choose a home that does not require a huge amount of upkeep, especially if the property may stand empty for a large portion of the year.

Alternatively, if you need a more spacious leisure property for a larger family or extended family, you could consider a lifestyle estate which also offers excellent security. These are increasingly popular and usually include a number of leisure facilities, such as a golf course, gym, swimming and walking, says Dobson.

7. Making a sound investment

For resale purposes, ensure you buy a home that suits most families, and rather spend a little more in order to have a fantastic view, which again adds value should you decide to disinvest later on, advises Van der Westhuizen.

Lloyd recommends looking for an area with strong investment potential.

This three bedroom, two bathroom home in Scottburgh, KwaZulu-Natal, offers a large garden and is close to amenities. It is on the market for R1.55 million - click here to view.

“Is the area attractive to different market segments, namely holiday homeowners, young families with children, retirees, local regional residents, visitors and investors from other parts of the country? Can the area expand and grow or is future expansion limited, and how will this impact on the property market and my property investment? Ask an estate agent to give you some information on property growth trends over the last 10 years,” says Lloyd.

If buying a coastal property, bear in mind that buying a home, ideally a three bedroom, two bathroom unit with a sea view or in close proximity to the beach, will optimise the investment return should you need to sell the property later on.

8. Planning ahead

If you are in your 40s, you may be looking ahead to buying a property to retire to. This makes good sense as by the time you reach 60 you could have a home on the coast that is then fully paid for. At the same time your primary residence has increased in value, the sale of which will provide you with cash flow or funds for further investment.

This four bedroom, two bathroom house in St Francis Bay, Eastern Cape, offers mountain, golf course and sea views. It is on the market for R1.75 million - click here to view.

An added benefit is that you have most likely built relationships in the local community and at the local golf, tennis or bowling clubs, and you already know your neighbours. This makes relocation when you retire less stressful.

9. Letting income

“Holiday homes should be both for leisure and for investment purposes, so I would advise my clients to invest in holiday homes where short-term letting is allowed, or even Airbnb letting. This would mean that their properties can generate returns when they are not using them. To this end, a managed apartment block that offers a key and laundry service would be ideal, as the property would be hassle-free and the owners could book several weeks per annum for personal use and leave the management agents to manage their short-term lets in between,” says Carol Reynolds, area principal for Pam Golding Properties for Durban Coastal says.

“Work through a reputable agent who can ensure holiday rentals in the months your holiday home is not occupied, and who can also manage the house on a monthly basis, or as required,” advises Dobson.

Reynolds provides five tips:

- Invest in a property or complex that allows short-term holiday letting.

- Find a way to reduce the hassle of property management - either via a trusted agency or by investing in a complex that is self-managed.

- Furnish the unit nicely without overcapitalising - this is a holiday home, not a primary residence.

- Most people seek location first when looking for a holiday let, so invest in a great location close to the beach or local amenities - this will make the property more desirable from a letting perspective.

- Always ensure you invest in a healthy complex where the body corporate is well run and the complex is well maintained. Your holiday home investment should be as low maintenance and hassle-free as possible, you don’t want to become embroiled in a poorly managed apartment block with weak financials and insufficient funds for ongoing maintenance.

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