South Africa has an abundance of beautiful coastline, with dorpies, towns and cities dotted along the way. Some of it is overpopulated and some, relatively untouched. As an example, to drive along the Wild Coast route is to journey into the true beauty of the country’s natural landscapes with its magnificent views. While the bigger cities continue to attract the multitudes during holidays, smaller places also draw in people in their thousands not just from across the country, but globally.
Visit a place like the Tsitsikamma National Park and you’ll find yourself surrounded by multiple languages, primarily from outside the continent. Initiatives like Brand South Africa’s Sho’t Left continues to be a driver to encourage South Africans to travel and experience the country, as opposed to only travelling beyond our borders. And, while the coast is usually where most of us flock to, especially when it comes to holidaying during the summer months, the country also offers so much inland, with endless experiences that provide for all types, whether you are looking for rest or adventure.
Where to rest your head
While there’s an abundance of holiday accommodation around South Africa, buying a holiday home might be the best option for you. Kojo Baffoe surveys the landscape and considerations surrounding investing in a second property.
Resorts, bed & breakfasts, lodges, hotels and self-catering establishments have, for a long time, been the preferred form of accommodation for holidaymakers. There was also a time when timeshare – a definition for which is “a holiday house or apartment that is owned by several different people who each use it for a particular period of the year” – was popular but to many, experience has left a bad taste in the mouth. The National Consumer Commission (NCC) is in the process of investigating holiday clubs that provide timeshare due to the contracts these businesses lock consumers into and how impossible it is to ever get out of the contracts once signed.
In the same way that it disrupted the hotel and hospitality industry around the world, Airbnb is having an impact locally and, perhaps even more significantly, on the property market itself. There has been a shift from people listing rooms in the house or apartment they live in, to the listing of houses or flats in which they don’t.
In an article by Steve Kretzman for news website GroundUp (October 2017), titled Airbnb and Cape Town’s rising rents: an interview with Chris Lehane, Kretzman writes, “With 17 600 listings representing 17.6% of total Airbnb listings on the continent, Cape Town is also beginning to feel the pinch of what has been called the Airbnb effect – the view that there may be thousands of houses, rooms and apartments no longer available for rent to residents, as owners choose to rather make money through short-term lets on Airbnb than risk defaulting tenants. Certainly, property prices in Cape Town, where over 40% of all South African Airbnb listings are situated, have grown phenomenally over the past five years, particularly in the city bowl, Atlantic seaboard, and southern suburbs where Airbnb listings are concentrated.”
Where to buy?
You need to take what Lehane says into consideration when exploring whether to purchase your first holiday home. John Loos, FNB’s household and property sector strategist says, “At present, a low percentage of South Africans are buying holiday homes, but it must be noted that there are a couple of biases in the data. For one, we calculate according to secondary property ownership, which is estimated at 16% of total properties. Holiday homes are a smaller portion of these because, often, the second property is usually bought to rent. Our estimates come from our Estate Agent Survey and when we asked ‘what percentage of total home buying do you believe to be a holiday home’, the estate agents responded that it was 3.3%. In addition, the survey’s focus is around major metros, and won’t include smaller holiday areas.”
And, it is in the smaller areas that one finds a greater demand for property, although it’s difficult to differentiate between what’s being purchased as holiday homes versus retirement demand. Loos adds, “In the KwaZulu-Natal area, the North Coast is doing better than the South Coast but the Durban economy is moving up north so you have to take that into consideration. Plus, places like Ballito are becoming commuter towns.”
Other areas experiencing higher demand are the southern Western Cape, i.e. Mossel Bay, Knysna, etc., but, in some instances, people are moving from cities like Johannesburg and Pretoria to retire there. Also, you have people settling in towns like Hermanus and travelling to the larger metros for business, for example, consultants.
The development of multiple estates around the country is possibly also driving this trend of people setting up a home or buying holiday homes in areas that are on the fringes of the major metros. Val de Vie in Paarl, Zimbali Coastal Resort and Estate in Ballito, Fancourt in George, Mjejane Game Reserve in the Kruger National Park, and Whale Rock Ridge in Plettenberg Bay are some of the high-end estates that are operating and can serve as holiday homes for those with extra income. House prices range from R3 million upwards and each estate has an array of facilities and services, such as spas, golf courses, restaurants, tennis courts, clubhouses, pools, etc.
Should you buy?
So what must you consider when deliberating about buying that holiday home? Firstly, you need to be clear on why you want one since there are alternative options available to you without having to take a second home loan with a bank. As Loos explains, “Many people want a holiday home because they generally want their own space to be able to leave their own stuff around the house, have their own pictures on the wall, design, decorate and refurbish as they want.”
If this is the case then, by all means, go for it but the location is also as important. You’re buying the holiday home to hopefully enjoy it. If you live in Johannesburg and you buy in Cape Town, for example, you have to think about how often you’ll be able to get there due to the distance. How often can you afford to fly there? For Loos, “If I was in the game for a holiday home, I would look at location in relation to where I live. For example, if I was in Joburg I would look at the Vaal Dam because, whenever I have time, I can go through. One could even commute during holidays.”
Another factor to think about is the costs of managing the home remotely. If you consider how much you spend on your primary property then it will give you a sense of the running costs of the second one, especially since you aren’t there all the time. You don’t want to spend your holidays dealing with maintenance issues.
Furthermore, banks tend to have more stringent requirements when looking at affordability, especially if you have an initial home loan. Perhaps a lock-up-and-go apartment at the coast might be better. Some estates provide services like cleaning so you don’t have to, but it’s still a cost albeit less than hiring someone yourself.
Finally, Loos believes that “owning your own holiday home is not a great investment unless you have a letting agent, for example, for weekends. And even with that, you do not have a regular tenant so it won’t necessarily make that much income.”
This doesn’t mean that you shouldn’t explore the possibility of buying your first holiday home, just that you should go into it with your eyes open. There are so many options available and there’s nothing better than holidaying in the comfort of your own space.
“At present, a low percentage of South Africans are buying holiday homes...”
“Many people want a holiday home because they generally want their own space to be able to leave their own stuff around the house...”