Holiday properties 'start to stabilise' after long slump

The residential property market in holiday towns appeared to have achieved some price stability last year after a significant price drop in 2010 and 2011, FNB said this week.

FNB household and consumer sector strategist John Loos said the average price growth in the major metro areas had exceeded that of holiday towns in the past three years. Average house prices in the big cities grew 3.8 percent last year.

By comparison, the price index for holiday towns showed only small average price growth estimated at 0.9 percent last year and still seemingly lagged the performance of major cities, Loos said.

However, he said the positive 0.9 percent growth in average house prices in holiday towns was significant after the 5.2 percent decline in the average holiday town price in 2011 over two years from 2009.

"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 said.

The FNB estate agent survey estimated holiday home buying as a proportion of total home buying at an average of about 2 percent last year. This was still significantly lower than the estimated 4 percent in 2007 but a bit higher than "the lowly 1.5 percent" recorded in 2010, Loos added.

The house markets in holiday towns were still expected to lag the major city markets in terms of price performance for the foreseeable future because there remained significant weakness in the economy and in household finances.

In addition, many municipal rates and utility bills were rising steadily, making second homes significantly more costly to own and run.

Loos said the performance of the holiday town house market remained a lot weaker than 2004 to 2006 when price growth was estimated to have outstripped that of the major cities.

He said these markets should be expected to be more cyclical than the cities due to the non-essential nature of holiday home demand.

The economies of many holiday towns could also be more cyclical because corporates often centralised activities to larger centres in tough economic times and the tourism or getaway demand that often sustained such smaller towns was tied to economic cycles.

"But nevertheless, while lagging the cities, holiday town markets seem slightly happier places to be as some semblance of price stability appears to have been reached," he said.

(Business Report)

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us