Holiday town houses fetch steeper prices
HOLIDAY town homes are again selling for good prices. In the latest Holiday Towns Index compiled by FNB the residential market in holiday towns has shown a noticeable strengthening in house price growth performance.
FNB Home Loans household and property sector strategist John Loos said since the end of the property boom around 2008, up until earlier this year, there was a relative weakness in the holiday property-driven residential markets.
"Being non-essential in nature, holiday property buying tends to be more cyclical than primary residential demand, implying certain smaller town residential markets that are strongly driven by holiday property demand should generally be more cyclical than major cities which are overwhelmingly driven by primary residential demand.
"However, after a very long period of 'abnormally' low interest rates, gradually the confidence levels of a growing portion of the household sector in its ability to afford luxuries appears to be increasing," Loos said.
The growth rate of the FNB Holiday Towns Index recorded a year on year price growth rate of 10.5% in the third quarter, overtaking the Major Metro House Price Index growth rate of 7% for the same quarter.
"Despite this recent acceleration in the Holiday Town House Price Index, however, we remain of the belief the holiday town market won't significantly outperform the major city markets on a sustained basis over the next few years.
"Interest rate hiking and tough economic times are believed to have a bigger impact on non-essential home buying than on essential home buying."
"For the time being, though, the holiday town market's house price growth rates appear to have caught up with, and perhaps even overtaken, those of the major cities, following some years of 'underperformance'," Loos added.
Pam Golding Properties (PGP) area principal in Mossel Bay Keith Murray said the past 18 months had seen a marked increase in residential property activity at the Pinnacle Point Beach & Golf Resort near Mossel Bay on the Garden Route.
"There has been a dramatic upturn in enquiries and sales at Pinnacle Point, and in the 12 months since October 2013 PGP has sold a total of 40 properties comprising 23 stands, seven lodges, five homes and five villas," Murray said.
Most of these purchasers were from around South Africa and the homes are acquired for a mix of holiday, retirement and investment purposes.
"We've seen a major turnaround in the residential property market in Pinnacle Point." - Cindy Preller
