Share

Should you buy a holiday home?

Owning a holiday home has a ring of success attached to it.

It speaks to advancement in social and financial status, especially if that home happens to be in an exotic location or along South Africa’s mega-expensive real estate strips.

Yet the status symbol of a second home is not always the primary motivation for acquiring a leisure property.

For most wishing to own their own piece of utopia, the chief incentive is the ability to escape to that property at a moment’s notice, for as long or as often as they desire.

Not too many people have the financial wherewithal to be able to own more than one property.

The percentage of holiday-home buyers is small, around 3% of total home buying, mostly from higher income earners.

Yet a growing affluence from the broader population, and increasing affordable developments along some of the popular holiday hotspots, has contributed to growth in holiday homeowner numbers.  

“A holiday home is a lifestyle buy. Something you buy to enjoy,” says John Loos, FNB’s household and property sector strategist. “And those that stand empty are not investments.”

Ironically, many trophy holiday homes do stand empty.

But not all holiday homes are dotted along South Africa’s outrageously expensive real estate strips.

Some are much-used humble holiday dwellings, located off the beaten track.

“It’s very much about personal requirements determining what, and where, people will buy,” says Jacques du Toit, Absa property analyst. 

It is when the holiday home is to serve the dual purpose of leisure and investment that location, price and ability to tap into the rental market to recover some of the costs of owning that home, become even more significant.

“Property value grows over time, especially if the property is in a good location. Location is always important, but especially so if a combination of leisure and investment is required,” says Du Toit.

Is a holiday home a sound investment?

According to Sharman Williams, Regional Head of The Wealth Corporation, here’s what you should establish:

· Is it in a good location where property is likely to appreciate?

· Did you pay a fair price for it or a price less than its true value?

· Can you comfortably afford the costs of paying off and maintaining the property?

· Is it accessible to enable you to make regular use of it?  

This is an excerpt from an article that originally appeared in the 31 December 2015 edition of finweek. Buy and download the magazine here

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.0%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders