Housing prices in South Africa’s leisure property market are still increasing, but they’re slowing as a result of slower economic growth and the prospect of rising interest rates, MoneyWeb reports.

There’s a glut of leisure properties on the market, especially in coastal areas, said Herschel Jawitz, CEO of Jawitz Properties, in an interview with MoneyWeb. Times are difficult, and to make matters worse, banks are getting pickier about approving loans. “Bank lending on secondary properties is still very tight as they are taking a conservative view on borrowing on these properties,” Jawitz said.

Prices in the leisure property market slowed from a high of 3.3 percent growth in the second quarter of 2014 to 2.1 percent in the first quarter of 2015, according to First National Bank South Africa’s Holiday Towns House Price index. In 2014, some thought they were seeing a recovery in leisure property price growth after a five-year period of zero capital growth from 2009 to 2013, according to MoneyWeb.

The index compared growth of prices in holiday towns to major metropolitan areas based on transactions in towns deemed to be “strongly holiday-property driven.”

“While holiday towns have had a relatively good run through 2014, signs of
slowing house price growth in these regions as a whole are evident, a reflection of rising interest rates and slowing economic growth,” said John Loos, household and property sector strategist at South Africa’s FNB.

The market is still spooked from the global credit crisis in 2007, MoneyWeb reports. House price growth declined from about 20 percent (year-on-year) in 2007 to 12.1 percent in the fourth quarter of 2014, according to FNB. In 2004, the market saw a 58-percent year-on-year growth.

Despite market challenges, the market is starting to attract cash buyers from the growing ranks of ultra-high net worth individuals who have at least $30 million (354 million rand) and want trophy homes, MoneyWeb reports.

Traditional leisure property towns such as Knysna, Bantry Bay, Clifton, and Plettenberg Bay have seen a sharp increase in interest, along with KwaZulu-Natal’s upper coastal towns of Umhlanga and Ballito, according to Samuel Seeff, Chairman of Seeff Property Services. Properties there can cost up to 160 million rand ($13.5 million US).

South Africa’s luxury property market overall is attractive among investors due to the weak rand, said Andrew Shirley, editor of the Wealth Report. Globally, luxury properties grew by 2 percent, while African properties overall saw a more respectable 6.5 percent growth.

South Africa was the only African country to feature in Knight Frank’s top 40 most important cities for ultra high net worth individuals, MoneyWeb reports.

Loos expects house price growth to slow soon to single digit rates.

“When times are good economically people want holiday homes,” Loos told MoneyWeb. “Last year (2014) the market made a comeback, but the market was still not pumping.”