Property Talk

Second home buying is something we are familiar with across the greater Ballito area. For many years Ballito was considered a predominately second home market. This has started to change dramatically over the past five years as many people move northwards from the traditional suburbs of Durban or down from Pretoria and Johannesburg in order to explore the value propositions and life style benefits found within the many gated estates along the Dolphin Coast.

For many of those migrating from the Highveld to the greater Ballito area, the main driver is a better quality of life rather than better economic prospects. In many instances the properties are relatively more expensive here than in Johannesburg, which can be a bit shocking considering the general level of salaries are lower in KZN than in Gauteng.

FNB through their quarterly estate agent survey compile interesting data on estimates of secondary home buying in South Africa. Their recently published report shows an uptick in second home buying in the first quarter of 2017 measured at 14,47% of total buying. In this instance second home buying represents holiday homes, homes for use by a relative and buy-to-let homes.

We know that the SARB leading business cycle indicator is indicating improved economic conditions for 2017. The activity in the residential real estate market we have experienced during the first quarter of this year may be indicative of this expected improvement. We know that when things get tough, the holiday homes or other non-essential non-primary properties are put up for sale.

The growth in secondary home buying on a year-on-year basis remains relatively flat however. Using deeds office data to isolate ownership by a persons natural name FNB then determine which of these people own more than one property registered in their personal names.

This process resulted in an estimate of 16,24% of total property buying being described as a secondary home buying in January 2017. We know this system is not fool proof as the ownership of a second property is often registered in a trust or other legal entity for good reason. Properties registered in this way would therefore escape the FNB calculation and estimate.

Nevertheless as a fairly good and accurate proxy of total secondary home ownership it does make sense to focus only on properties owned by natural persons. As estate agents we are delighted about the migration into the Ballito area as it brings more activity and more business. A higher percentage of primary home owners also suites us as it creates a more stable property market less prone to larger fluctuations in pricing and demand.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.