Holiday town house price growth slows further

Private Property South Africa

After a reasonably solid period from 2014 until early 2015, the FNB Holiday Towns House Price Index has more recently shown a loss in price growth momentum.

This index is compiled from Deeds transaction data for towns deemed to be “strongly holiday property driven”.

In the first quarter of 2016, the index turned to negative year-on-year price growth of -4,1%, down from a slightly positive revised rate of +0,5% in the previous quarter.

FNB household and property sector strategist, John Loos, says that this is the 1st quarter of year-on-year decline since the 1st quarter of 2012, and is the index is under-performing the average house price growth rate of 4,5% year-on-year of the more primary residence-driven major metropolitan markets.

This continues a slowing growth trend which started in 2015, after a fairly strong high of 11,4% year-on-year price growth recorded in the final quarter of 2014. Then, holiday towns were inflating faster than the more stable primary residence-driven metro markets.

“It’s natural for markets such as holiday towns, which rely on a high level of non-essential holiday home buying, to be more cyclical than the more primary residence-driven metro markets, thus leading to the Holiday Town House Price Index showing higher growth peaks and lower troughs than our Major Metro House Price Index,” says Loos.

This article originally appeared in Neighbourhood, Sunday Times.

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