Are we finally seeing decent prices on holiday homes
According to FNB's John Loos
Due to the non-essential nature of a holiday home, holiday home buying has taken more of a back seat to primary residential buying during the tough financial times of recent years. Now, in 2012, after a very significant real price decline in the FNB Holiday Towns Index, some return to price stability may be being observed.
The holiday property market has had major challenges in recent years. After the 2008/9 recession South Africa’s household sector has been under significant financial pressure, and the sharp rises in municipal rates and utilities tariffs related to housing must surely have caused a good number of aspirant holiday home buyers to rethink the merits of owning a 2nd home for leisure purposes.
The FNB Estate Agent survey appears to tell such a story. Whereas back in early-2007, prior to the recession, the sample of agents surveyed estimated that 5% of home buying was for holiday home purposes, in recent years the percentage has ranged between 1% and 3% of total buying. In the 3rd quarter survey of 2012, the percentage of buyers buying for holiday home purposes was estimated at 2%, unchanged from
the previous quarter.
Therefore, our agent sample certainly doesn’t point to a strong holiday buying market, but one that is slightly better than the low of Winter of 2011 where only 1% of buying was believed to be for holiday purposes.
However, it is possible that after a major downward correction in real holiday town home values, the combination of holiday home buying being slightly up off the low point, combined with improved price realism, may have led to a move towards real price stability in holiday town markets.
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