The holiday home market in the Western Cape is being hit hard by the economic conditions, despite the province being a major tourist destination. Holiday home purchases are still taking place, but sales have slowed, agents are reporting.
The market has undoubtedly slowed along with the economic and political climate, but as Cape Town is a tourist capital and destination there are “always people looking to buy”, says Tamara Nettmann, a principal at Century 21’s Western Seaboard office.
“It has been a little quieter, but with the December swallows visiting our shores soon, we will be expecting some interest. Investors are shopping a little more and the market is in a correction from previous high annual growths experienced in past years.”
Nettman explains though, they are not seeing more people selling their holiday homes, but rather, “less movement”. Added to the tough market conditions, many investors looking to rent their properties are being prohibited by body corporate rules. But holiday investment is still there, says Marlene Snowdon, also a Century 21 principal in the area.
The higher end of the market, however, is seeing less activity. Homes that are selling are those priced from R1.85 million to R4.5m in areas like Sunningdale, Parklands North and the up-and-coming Sagewood Estate in Sandown. Homes over R2.5m are taking longer to sell and seeing more negotiation on price.
The effects of the economy and political environment is also being felt on the holiday home market in Knysna, which Julian Buck, principal of Jawitz Properties, says is slower than in past years. “Sales are down from recent years and the homes that are on the market are not being snapped up. Only those that are priced competitively are selling.”
Those who are still looking to buy in the area are generally after properties close to the lagoon, or which offer good views. Homes being purchased are also planned for dual use – as a holiday home for now and as retirement home for later, Buck says.
Holiday homes that are coming on to the market are “usually quite large” and “no longer needed” as children have now grown up and have families of their own. “These owners are now looking for smaller retirement homes. The pricing of these larger homes is usually more than the market is comfortable with due to the fact that they’re at the upper end of the market, but are not in the condition that merits the marketed price,” he says.
FNB statistics show that secondary home ownership has declined, says the bank’s property economist John Loos. Secondary home buying accounted for 14.47% of total home buying in the first three months of 2017, but by the second quarter of 2018 (April to June), had declined to 9.91%.