Home / News  / Holiday home purchases put on ice by cautious consumers

Holiday home purchases put on ice by cautious consumers

Deserted holiday area

The latest FNB Property Barometer reported that the FNB Holiday Town Repeat Sales House Price Index has shown very similar rates of year-on-year growth to the FNB National Repeat Sales House Price Index.

However, a look back over the past 17 years shows the Holiday Town House Price Index to be more cyclical than the National Index, the latter being dominated by the more stable urban primary residential demand in the major cities.

In the pre-2008 boom, it was the Holiday Town House Price Index which far outperformed the National Index, and vice versa from 2008 to the present time. This has translated into cumulative house price growth in both indices from the beginning of 2001 to mid-2017 being almost identical.

Considering the signs – The slowdown of the FNB Holiday Towns House Price Index year-on-year growth rate from a relative revised high of 6.4% year-on-year as at the 3rd quarter of 2016 to 4.8% by the 2nd quarter of 2017, and with FNB’s Valuers perceiving holiday towns’ market strength to have weakened more noticeably of late than the major cities, FNB’s John Loos, household and property sector strategist, indicated that the expectation is that holiday towns may revert to underperforming the larger cities in terms of house price growth.

This is based on the expectation that the stagnant economic conditions in South Africa will persist, that consumer confidence will remain weak, and that a more cautious household focused more on essentials and less on luxuries will emerge. That militates relatively in favour of more primary residence-driven major urban markets.


Review overview