Of all the SA residential property sectors hard hit by the 2008 – 2010 downturn it has been the holiday, leisure and coastal communities which have seen the biggest price drops and the most unsold stock on the market, says Jason Lee, Rawson Auctions’ strategist and legal expert.
"Right now, if we take the Cape as an example, Peninsula residential property is taking just under 100 days on average to sell, but in West Coast villages the average sale time is now 270 days — and there is a great deal of stock on the market right now."
The main reason for this, said Lee, is that many of the properties in these areas are second homes bought in the boom times for holiday, retirement or renting out purposes.
When times got tough, says Lee, the owners often tried to offload these but, as buyers were suddenly few and far between, they have had to discount prices by 30 to 50 percent and, in a few cases, even more.
This tragic situation, says Lee, does mean that the investor able to raise finance, and take a long term view, can right now find really good homes in the recognised holiday towns (like Hermanus, Onrus, Langebaan, Knysna, Plettenberg Bay and Mossel Bay) — and he will get even bigger discounts on vacant land which in some areas is going at 30 percent its original price.
"Looking ahead five to ten years," said Lee, "it seems clear that those who can buy at today’s prices will see really impressive capital growth if they can hang in there for five to ten years."
Lee also commented that, if a home is suitable for short term (day, weekend or weekly) rentals, the returns on it can still be good — provided that the landlord is able to supervise the tenants’ reception and monitor their behaviour or has an efficient agent able to do this for him.