In October 2014, around 560,000 Australians owned a holiday home, just under 3 percent of the population.
The research also revealed Melbourne natives showed themselves as happiest to holiday at the same spot again and again, since almost a third of Aussie holiday homeowners live there. While Melbourne led the pack for city investors, perhaps unsurprisingly only 1 in 50 non-capital city dwellers owned a holiday home.
Since 2014, continued house price growth and a weakening Aussie dollar have seen the holiday home real estate market stay strong, as buyers tap into the potential offered by domestic holiday makers, and flex their new-found confidence in the security of property as a long-term investment.
These days one in four Aussies say they’d love to own a holiday home, and more than one in ten plan to buy one this year.
Beachfront bargain hunt?
While you might hanker after a holiday home near the beach where you spent long glorious summers as a kid, some of the more popular destinations can be pricey. The median price for a coastal property in Byron Bay is almost $1million, while at Surfer’s Paradise on the Gold Coast it’s over $1.2million.
But there are still coastal bargains to be had if you steer clear of the headline holiday destinations. The Victorian seafront suburbs of Seaspray, Loch Sport and Golden Beach all boast median prices of less than $215,000. For an extra $35,000 you can pick up a beach front bargain in the South Australian suburbs of Cape Jervis and Wallaroo. And if your budget can stretch to $350,000 you could take in the ocean views at Stuarts Point and Karuah in NSW, or Mission Beach and Yeppoon in Queensland.
Sun, sea and sand on demand
Buying a holiday home in a place that your family love can mean freedom from the dilemma of choosing a new holiday destination each year. And freedom from arriving at a rented house and wondering if the place will be clean, comfortable and nicely furnished.
More importantly, a holiday home can mean rent-free holidays for you and your friends for as long as you want, when you want; whether it’s two weeks in the summer, or a long weekend just because you feel like it.
Of course, you probably need a few better reasons for buying an investment property, so before you take the plunge it’s a good idea to decide if your holiday home is a lifestyle choice, part of the kids’ inheritance, or the latest addition to your income-generating property portfolio.
Will my holiday home be a money spinner?
These days it seems everyone is earning a few extra dollars renting out their spare room on Airbnb. Currently there are more than 87,000 Australian listings on Airbnb earning over $4,000 by hosting for an average of 28 nights.
With a good house in a popular location, even renting it out for a few months each year could generate worthwhile income, but there are some other things to consider before you set up as a holiday landlord:
• While you can claim expenses for the period your holiday home was genuinely available to rent, even if no one rented it, you need to declare and pay tax on any rental income • If your family and friends use it for free then any expenses incurred during that time are not tax deductible • Holiday rentals tend to be short term and demand fluctuates so it’s likely to empty for long periods • Cleaning, maintenance, advertising and management costs will all eat into your rental income • Demand is also likely to be highest in peak season, just around the time you might be planning your own holiday
But if you’re happy to holiday in the off season, you’ve added up the costs, and you’ve researched and picked a destination you’re confident will be popular with enough tenants, then a holiday home could give you the best of both worlds.
Email from local PR company that represent Airbnb in Australia … was directed to these people when I asked the question to Airbnb directly back in Jan.
Will my holiday home fund my future?
Regional property prices in Australia haven’t been growing at the same rate as the capital cities in recent years but they are still trending upwards, with lifestyle and coastal real estate putting in a strong showing.
However, it’s important to consider that prices can go down as well as up. Trends change and todays’ popular holiday destinations might not appeal to future generations of holiday makers.
So, if you’re relying on an increase in the value of your holiday home to fund your retirement or help the kids get a head start in life, there are a few other things to think about before investing in a sea or mountain view:
• Holiday property prices tend to be more volatile, so it might not go up in value as much as you hope, and could take longer to sell when the time comes • As it’s unlikely to be your primary residence, your holiday home will probably incur capital gains tax when you sell it • Chances are you’ll need to pay a mortgage on the property so be confident it’s a financial burden you can manage • Aside from a deposit the associated costs of buying property including stamp duty, legal and real estate fees, and inspections can soon mount up
If you’ve researched the market and the growth potential satisfies your needs, then a holiday home could have potential as both a sound investment and a vacation destination every year. Before investing in any property, whether it’s your first home, a holiday home or your next investment, it’s smart to get professional advice. Start a conversation with Aussie as part of your research and talk to one of our broker’s today about a mortgage deal for your holiday home.
