If you have always dreamed of buying a second home in your favourite holiday spot then the current market is just right for that.
Ironically though, the conditions that are creating good opportunities for second home buyers are a result of current holiday home owners selling up.
The festive holiday season is around the corner and, for many people, this time of year may trigger or re-ignite thoughts of buying their own holiday home to escape to.
Berry Everitt, chief executive of the Chas Everitt International property group, says such plans are currently being fuelled by lower prices in many popular holiday spots where owners who are over-extended financially – due to higher interest rates, are trying to sell off their second homes. And they are eager to negotiate.
In addition, the current market conditions make it an “excellent time” for those with spare cash available to invest in property, since they stand to make excellent returns as inflation and rates decline again over the next few years.
“Indeed, inflation is already close to the mid-point of the Reserve Bank’s target range, and rates are expected to hold steady from now until they start declining early next year.”
However, he notes that a holiday home for the exclusive use of your family and friends is “quite a different proposition” to an investment property that you intend to let to short- or long-term tenants. It is therefore not a decision that should be made without first considering all the pros and cons.
“The advantages of buying a holiday home include the convenience of having your own getaway to escape to whenever you want, and never worrying about having to book in time or pay higher accommodation prices in high season.
“Also with the trend towards more remote work, there’s a good chance that you’ll be able to visit the property more often than just once or twice a year, and get more enjoyment out of it.”
Another plus is that you will already be familiar with the location and amenities, so won’t have the stress of getting to know a new place while you’re supposed to be relaxing on holiday.
“You’re also more likely to make local friends and get involved in the local community, which is very important if you intend to retire to your holiday home in a few years’ time.”
Not only will you be able to also decorate and furnish you home to your liking, but you can look forward to a return on your investment as the value increases.
Everitt says you do need to take into account though, that the property will require regular maintenance and perhaps repairs, even when you aren’t there. You will also have additional property taxes and utility charges to pay, as well as a monthly levy if you buy in a security complex or estate.
These costs may ultimately persuade you to start renting out your holiday home during the times when you are not there, and perhaps to even restrict your visits so that you can maximise your income by letting during high seasons, at least until you retire and move there permanently.
“But if you do decide to let your holiday home at least part of the time, your very first move should be to appoint a professional rental management agent, who will relieve you of the difficulties of remote tenant and property management, and help you lower the risk of non-payment and inconsistent income.”
How to choose the right holiday spot to buy in
From coastal regions and mountainous retreats to wildlife getaways in the bush and silent sanctuaries deep in the Karoo, South Africa offers an abundance of great holiday spots. But if you are trying to find the best one to buy in, there are some things you need to consider.
With so much choice available, ooba Home Loans says the question is not so much ‘which is the best’ as it is ‘which will best suit your requirements’. Here are two factors you need to consider:
1. Distance from the city: How far from civilisation you’re willing to go depends on whether you intend the holiday home to be used for quick weekend getaways or long vacations.
2. Location: Coastal holiday houses are generally going to appeal more to foreigners, so if you intend to rent it out you might be better off opting for a home on the Atlantic Seaboard, or perhaps in rustic seaside towns like Hermanus or Arniston. Holiday homes deeper inland are best reserved for those who appreciate what South Africa has to offer beyond the glistening beaches that appear on all the postcards.
Other things ooba says you need to bear in mind when finding the right holiday house include:
- Size: It’s usually better to prioritise location over size, so opt for a smaller home in a great area if possible. Of course, you also have to take into account whether the home will need to be family-friendly, with space for children and extended family members, and perhaps even a pet.
- Condition: As with any new home purchase, you’ll want to perform a thorough evaluation of the condition of the house, especially if it’s located in a secluded wilderness area where damp and vegetation can spread.
- Nearby facilities: Finding the right balance between seclusion and proximity to shops, emergency services, adventure providers, and other such facilities, will significantly contribute to the value of the home.
- Security: Contact the local police force or neighbourhood watch to see if you can get information on crime rates in the area.
“Ultimately you want a holiday home that is easy to maintain, and well suited to a lock-up-and-go lifestyle, as the house may stand unoccupied for long periods of time.”
IOL Business