- Even with all our political and economic issues, our tourism industry remains resilient, making holiday homes a solid investment.
- There’s no shortage of fine destinations for holiday homes in South Africa; to narrow it down you need to determine your requirements.
- You’ll want a home that is easy to maintain, as it may be unoccupied for long periods of time.
It’s hard to put a damper on South Africa’s allure as a tourist destination. Whatever issues we may be dealing with, whether it be a water crisis, load shedding or controversial land reform policies; you can still rely on the tourists to come rolling around every holiday season, unable to resist the beauty, diversity, and favourable exchange rate of South Africa.
Buying a holiday home: How to get the most out of your investment
Whether you’re a foreigner looking to buy a holiday home as an investment in South Africa, or a local seeking a weekend getaway (perhaps with the option of renting it out to tourists); here’s what you need to know.
The best place to buy a holiday home in South Africa
South Africa offers an abundance of coastal regions, including the vibrant Atlantic Seaboard, and the windswept Whale Coast. Add to that mountainous retreats in Kwazulu Natal, wildlife getaways in the bush, and silent sanctuaries deep in the Karoo, where glittering night skies provide the backdrop.
With so much choice available, the question is not so much ‘which is the best’ as ‘which will best suit your requirements’. For example:
- Distance from the city: How far from civilization you’re willing to go depends on whether you intend the holiday home to be used for quick weekend getaways or long vacations.
- 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.
The most popular area for investment is the Atlantic Seaboard, which includes Sea Point, Clifton and Camps Bay. This area is a hub for luxury holiday housing, and probably not the place you want to look at if budget is an issue. However, homes in upmarket areas have seen a price deflation in recent times, resulting in a buyer’s market and presenting an opportunity for those who would normally consider areas like Camps Bay beyond their means.
Plettenberg Bay is another popular area for investment, situated in the Garden Route with proximity to the coast and the lush forests that give the region its name. The seaside town of Hermanus, where travelers come from all around to see the whales in Walker Bay during the breeding season, also provides a wealth of luxury investment opportunities.
But there are also lesser-known gems with more affordable options on offer; such as the lake-side town of Knysna, and secluded West Coast towns such as Yzerfontein and Langebaan.
Knowing the requirements of your holiday house
Others things to bear in mind include:
- Size of the house: It’s usually better to prioritise location over size; in other words, go for a smaller home in a great area if available. 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 of the house: 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.
Bear in mind the additional costs you may have to account for, such as electricity, furnishings, taxes and levies, and so on.
For foreign property investors
Foreigners can purchase property in South Africa, although certain rules apply. Foreigners must put down a 50% deposit on the home if purchasing a home with a mortgage. On the other hand, non-residents’ investments are not subject to South African tax, and if foreigners investing in property in South Africa later sell that property and wish to transfer funds out of the country, the local tax laws of that country will apply.
For South African homeowners
Bear in mind that even if you already own a property, you’ll have to go through the same process applying for a second home loan as you did for the first, including a credit check. If you intend to rent out the holiday home, also bear in mind that most banks do not take potential rental income into account when assessing your home loan application. However, you can use that income to pay off the bond. The sale of a second property will also be subject to Capital Gains Tax.
Market conditions may have affected property prices since you last purchased a home, so you should consider getting prequalified in order to get an idea of what you can afford this time. ooba home loans, South Africa’s largest home loan comparison service, offers a free, online prequalification tool in the ooba Bond Indicator.
So whether you’re a foreign buyer looking to invest in the South African property market, or a local looking for a holiday getaway, ooba home loans helps by providing a range of tools. Start with their home loan calculators; then use the ooba Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.
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