It would seem as if the holiday letting market in the Western Cape province of South Africa is still very profitable and active. Coastal property letting does not seem to have been affected negatively by the recent interest rate hikes by the South African Reserve Bank.
Holiday visitors are reported to arrive in the Western Cape a lot earlier in the season than usual, or postponing their stays until after the main December/January holiday rush period. The extended holiday season is expected to be very good for the coastal letting market, because it shrinks the period that was formerly considered to be part of the working year.
South Africans might be choosing to adjust their holiday schedules because the interest rate increases have left holiday makers with a little less disposable income, so they are taking advantage of the lower rates for coastal property rentals outside the peak holiday period.
Holiday visits also tend to be shorter. People seem to prefer to take two or three shorter breaks throughout the year, rather than one extended summer holiday on the Western Cape coast.
The interest rate increases has, however, influenced the holiday property buyer's behaviour. A recent opinion pole by Rawson Properties Group reportedly shows a decernable preference for renting coastal real estate, rather than buying.
Monthly rents in many areas of the Western cape are still less than half the monthly mortgage repayments for the property. Renting instead of buying makes good sense. Western Cape residents can maintain an affluent lifestyle with all the luxury amenities, without paying for it. The lucky tenants effectively get "sponsored" by the property owners to live in their luxury properties!
In some areas of the Western Cape, especially along the Garden Route and the Atlantic Seaboard, property owners are able to command exceptionally high rentals for their coastal properties. But rental properties that are in a break-even position, where rents and mortgage repayments are concerned, are the exception rather than the rule. And profitable residential rental properties are spaced even further apart.
Some families living along the Garden Route in the Southern Cape regularly vacate their homes and spend the holidays in a caravan park, so that they can take advantage of high short term rentals during the peak holiday season.
Residential property auctions that take advantage of the high concentration of potential buyers during the peak holiday period seem to be very successful. A number of prominent residential properties was recently sold by auction in the Mossel Bay area.
