PROPERTY BAROMETER HOLIDAY TOWN PRICE

TRENDS
Holiday town house price inflation remains reasonably solid, but further signs of
slowing house price growth in these regions as a group emerged in the 2nd
Quarter of 2015, as one would expect in tougher economic times
18 August 2015
HOLIDAY TOWN HOUSE PRICE INFLATION
TAPERS FURTHER IN THE 2ND QUARTER

A RECENT HISTORY OF HOLIDAY TOWN

PERFORMANCE

After some resurgence, off a low base, through

2013/2014, the FNB Holiday Towns House Price Index
has more recently shown signs of a loss in growth
momentum. This index is compiled from transaction
data for towns deemed to be strongly holiday
property-driven.

Prior to 2014, holiday towns had lagged the Major

Metro Residential Regions for most of the period from
2010 to 2013, showing house price deflation over a
significant part of that period.

In the 2nd quarter of 2015, the index showed quarteron-quarter growth of 1.9%, down for the 4th
consecutive quarter from a high of 3.2% reached in the
2nd quarter of 2014.

By 2014, however, financial pressures had eased after

some years of low interest rates, and the holiday town
market began to make a noticeable comeback. Its
prior price deflation and very low inflation over the
2010 to 2013 period had also driven a significant
holiday town residential affordability improvement.

Holiday Town vs Metro Average House Price

Index Growth - Quarter-on-Quarter

Year-on-year %

15%

5%

3.2%
1.9%
1.7%

Q1-2000

This was explained by a financially-constrained and

highly indebted household sector following the 2008/9
recession, and it was understandable that primary
residential demand-driven metros would perform better
than holiday markets that were strongly driven by nonessential holiday property buying.

Q1-2003

Q1-2006

Q1-2009

Q1-2012

Q1-2015

-5%
Holiday Towns - Quarter-on-quarter percentage change
Major Metros - quarter-on-quarter % change

This has begun to translate into slower growth in the

still-high year-on-year rate, from 11.6% in the final
quarter of 2014 to 10% in the 2nd quarter of 2015.
Holiday Town vs Metro Average House Price
Index Growth

Creating a Major Metro House Price Index and a

Holiday Town Index with 1999 = 100 in both, one can
see how the gap between the 2 that had been built up
during the boom years (when holiday town inflation
was far stronger at a stage) was all but wiped out by
early-2014. Recently, in a relatively good property
period, the gap started to widen slightly once more,
with holiday town prices inflating slightly more than
the Major Metros. But this is not expected to last for
very long as economic times toughen.
Holiday Town vs Major Metro House Price
Indices

57.3%

60%

850
750

35.4%

40%

20%
10.0%
7.4%

10%
0%
Q1-2000
-10%

654.6
613.6

650

30%

Q1-2003

Q1-2006

Q1-2009

Q1-2012

Holiday Towns - Year-on-year percentage change

Major Metros - year-on-year % change

Q1-2015

Index Q1 2000=100

Year-on-year %

50%

550
450
350
250
150
50
Q1-1999

Q1-2002

Q1-2005

Q1-2008

Q1-2011

Holiday Towns Average Price (Q1-1999=100)

Major Metros - Average Price (Q1-1999=100)

Q1-2014

We witnessed a similar 2014 improvement in the FNB

Estate Agent Survey, where the estimated percentage of
home buyers believed to be holiday home buyers
elevated broadly from early-2014 to hover at around
3%, after prior years of being more around 2-3%.
Since then, however, we have not seen any further
increase in this percentage, which appears to tie in
with tapering house price growth.
FNB Estate Agent Survey Estimated Holiday Property Buying

6
5
4

3
2
1
0
2007

2008

2009

2010

2011

2012

2013

2014

Buyers buying a holiday residence expressed as a percentage of total buying

2015

OUTLOOK
We expect the gradual slowing in house price growth in
the Holiday Town markets to continue in the near term.
This ties in with various other of our market indicators
which point to a more conservative home buying
approach emerging in a deteriorating economic
environment. This includes less non-essential
activities such as upgrading to better primary homes,
and we would expect that buying of 2nd holiday homes
may also once again take more of a back seat.
Given the non-essential nature of holiday home buying,
and thus the more cyclical nature of holiday homedriven residential markets, we continue to expect that
in this rising interest rate and low economic growth
environment, the price growth in our FNB Holiday
Town House Price Index will drop back to lower single
digit rates below that of the Major Metro Regions in
the not too distant future.

Smoothed

JOHN LOOS:
HOUSEHOLD AND PROPERTY SECTOR STRATEGIST
MARKET ANALYTICS AND SCENARIO FORECASTING UNIT: FNB HOME LOANS
Tel: 087-328 0151
John.loos@fnb.co.za
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