Johannesburg - Holiday home values are slow to recover from the slump as primary residence buying dominates and lending criteria remain tight, industry experts have said.
House price growth reached double digits in June, according to FNB's House Price Index last week. However, the bank said holiday homes and the buy-to-let market will lag the residential industry's recovery.
In the report, Loos said holiday buying will remain on the back burner as it is a non-essential buy.
However, RE/MAX CEO Adrian Goslett lays the blame with banks' tight lending criteria. In places like the KwaZulu-Natal South Coast, the majority of sales are paid for in cash. "The reason is bank finance," he said.
"The lower interest rates make a difference, sure, but it doesn't help a guy to buy a property if he has to put down a 30% deposit," said Goslett. "Just about every second house is up for sale."
According to Goslett, holiday homes on the Garden Route are also affected.
Standard Bank senior economist Johan Botha said the poor performance of the economy and households' indebtedness are the reasons for slow growth in holiday home prices as well as mortgage advances.
"It's a combination of banks being worried about the number of insolvencies and of indebted households," said Botha. "You can't necessarily blame one group - the general economic circumstances are just not that great."