Leisure property buyers trickle back

Owning a weekend bolthole in St Francis Bay, Ballito or Hermanus seems to have regained some of its former lustre. Industry players are reporting a rise in holiday home buying in recent months.

Leisure property sales, which hit rock bottom during the 2008-2009 recession, are now at their highest levels in six years, says Seeff property group chairman Samuel Seeff And it’s not only in the traditional second-home hot-spots like Cape Town’s Atlantic Seaboard, Knysna and Plettenberg Bay on the Garden Route, and Umhlanga north of Durban that there is a resurgence in buyer interest. Seeff says even smaller, secondary coastal enclaves are experiencing increased activity — places that range from Langebaan, Paternoster and Port Nolloth on the west coast to Port Edward on the KwaZulu Natal south coast and Kenton-onSea and Jeffrey’s Bay in the Eastern Cape. “A good portion of the stock that has been sitting on the market for a while is now finding buyers.”

Seeff believes perceived value has been a key driver of sales to both local and offshore buyers, since the drop in leisure property prices and sales volumes was much more pronounced than in the case of the primary home market. “The weak rand has also boosted sales to foreigners. On the Atlantic Seaboard, sales to offshore buyers are up an annualised 50% for the year to date.”

Pam Golding Properties group CEO Andrew Golding confirms the return of international buyers to SA. “We have recently seen an increase in Chinese, Indian and Russian buyers, and buyers from other African countries continue to rise to prominence — they now make up about 20% of foreign property buyers.”

Golding says the attraction for international property investors is hardly surprising, given the value to be found in SA. “For example, a luxury apartment in a topend central London area such as Knightsbridge would set you back the equivalent of R500000/m²-R750000/m². A luxurious high-end apartment or home of similar size and quality on the Atlantic Seaboard’s Clifton would require an investment of only one-tenth of that, in the region of R50000/m²-R75000/m²”

Jawitz Properties CEO Herschel Jawitz says that though supply still outweighs demand in most second-home markets, an increase in serious buyers in areas such as Plettenberg Bay, Knysna and Ballito has placed pressure on lower-priced stock levels, typically up to R1,6m.

However, the gap between asking and selling prices is still considerable for higherpriced homes and vacant land. Jawitz says buyers can get a discount of 30%-40% on prices that were achieved at the peak of the market in 2006-2007. For instance, a Plettenberg Bay home that was on the market at R16m for more than a year recently sold for R12m and a home with a R6m price tag fetched R4m.

In Knysna, a vacant piece of land in a sought-after gated estate originally priced at R450000 was eventually sold last month for R175000. Jawitz says in some coastal areas sellers are lucky if they get back 20% of what they paid during the boom.

Many of these sellers are speculators who bought land in second-home golf and lifestyle estates during the boom years but are now being forced to either build or face penalty levies.

Latest figures from Absa show that the recovery in coastal house prices still lags behind that of primary markets in the major cities. Absa’s house price index for coastal regions across SA (size 80m²-700m² and priced up to R14,6m) rose 4,8% in the first quarter year on year.

In contrast, middle-segment price growth in the primary-home market accelerated to 8,5% over the same time.

FNB property strategist John Loos says it appears that the improved performance of the broader residential market over the past two years has gradually begun to draw increased numbers of aspirant second-home investors.

FNB’s latest Property Barometer survey shows that holiday home buying as a percentage of total housing sales ticked up from 2% to 3% in the six months to the end of March (see graph). But the market still has some way to go to get back to the 5% that FNB estimates was achieved in early 2007.

mullerj@fm.co.za

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