Johannesburg - There has been a noticeable improvement in house price performance in the holiday town residential market, an FNB estate agent survey revealed on Thursday.
FNB household and property sector strategist John Loos said being non-essential in nature, holiday property buying tended to be more cyclical than primary residential demand.
“The state of holiday town residential markets can thus be one important indicator of the financial strength of the higher income household sector, or alternatively a reflection of the general popularity of the residential property asset class (popularity being important in driving luxury demand),” he said.
“We have seen a recent acceleration in the year-on-year price growth rate of the FNB holiday towns index, with the second quarter recording an 8.4 percent year-on-year increase.
“This is up on the previous quarter's 4.9 percent, and has gone ahead of the major metro house price index growth rate for the first time since the end of 2009.”
He said despite recent acceleration in the holiday town house price index, he did not foresee the holiday town market outperforming the major city markets on a sustained basis over the next few years.
Expectations for holiday home buying to be more constrained than primary residential buying were not only about current household sector economic and financial constraints.
It was also about the ongoing cost increases relating to owning and running a home, notably in the form of strongly rising municipal rates and utilities tariffs.
“For the time being, though, the holiday town market performances appear to be significantly improved on recent years,” he said. - Sapa