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Property Barometer - Holiday town price trends

Slowing Holiday Town House Price Index inflation may be pointing to a more cautious household sector, cutting back on “non-essentials” in weak economic times.

After some resurgence, off a low base, through 2013/2014, the FNB Holiday Towns House Price Index has more recently shown signs of a loss in price growth momentum. This index is compiled from Deeds transaction data for towns deemed to be “strongly holiday property-driven”.

Holiday Town Transaction volume growth appears to have slowed recently, after a solid period in 2014. In a weak economic environment, and with low levels of Consumer Confidence, they would expect the segment’s growth recovery of 2014 taper off. The slowing Holiday Town House Price Inflation rate, may be a sign of affordability becoming more of an issue, but is also likely to reflect an increasingly cautious household/consumer in a period where economic news is not overly positive.

Holiday Town markets, because of the nonessential nature of a significant portion of the home buying in such areas, are arguably more cyclical than the Major Metros, and more sensitive to economic weakness.

Therefore, they expect growth in the FNB Holiday Town House Price Index to be below that of the Major Metro Regions for the foreseeable future, in a stagnant economic environment.

Read the full report here



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