Australian House & Garden 199H&G PROPERTY
Illustration by Antonia Pesenti.
A
t this time of year you may be
sitting on a beach, soaking up the
sun and dreaming of your very
own holiday shack. Most of us check our
bank balance and put such indulgent
thoughts aside. If they linger, however,
due diligence is called for.
Holiday homes are about lifestyle, not
investment. They don’t normally attract
the same capital gains as homes in
capital cities and, if you’re counting on
rentals to pay the bills, vacancy rates can
be as high as 80 per cent. An analysis by
David Staples of Pitcher Partners found
that the annual cost of owning a holiday
home with a $500,000 mortgage would
pay for about 90 nights in a luxury hotel.
“They are usually bought when interest
rates are low and sold because offinancial stress, typically when interest
rates begin to rise,” he says.
The value of coastal properties
suffered disproportionately from the
global financial crisis of 2007-2008. As
discretionary assets, they were the first
to go on the chopping block. This meant
that tens, even hundreds, of empty
units hit the market at the same time in
many popular holiday spots. Now,
however, most capital cities are enjoying
buoyant property markets and the
ripples have spread to beach resorts.
If you’re set on a holiday home, there
are some important issues to consider.
First, try to buy as close as possible to a
capital city, to achieve good holiday
rental and occupancy rates, and close to
your principal residence. If it’s a longSWEPT AWAY
It’s fine to fantasise about owning a holiday
home. Just remember it’s a lifestyle choice,
not a moneymaker, writes Harvey Grennan.IN THE PICTURE
Median house prices for holiday homes since
the GFC in 10 of Australia’s top beach holiday
spots. (Source: realestate.com.au).2009 2014 (Sept)Byron Bay, NSW $710,000$812,500Port Macquarie,
NSW$370,500 $425,250Kiama, NSW $487,000 $635,000Surfers Paradise,
Qld$1,000,000 $1,112,500Noosa Heads, Qld $688,500$690,000Port Douglas, Qld $466,000$500,000Torquay, Vic $417,000$595,000Cowes, Vic
(Phillip Island)$297,250 $350,500Kingscote, SA
(Kangaroo Island)$240,000$240,000Margaret River, WA $417,500$477,500drive from home, you won’t use it
yourself as much as you might imagine.
A unit or a house? You can simply
lock up a unit and walk away with no
outside maintenance to worry about
and no lawns to mow. Holiday-makers,
however, prefer to rent a house.
Do the maths: can you afford the
mortgage repayments as well as stamp
duty, council and water rates, electricity
and gas, strata fees, agent’s commission
on rentals, land tax, repairs and
insurance? Talk to local real estate
agents about the rentals you’re likely to
achieve and for how many weeks a year.
Do you and your children want to
spend your holidays in the same place
every year? Even if you do, remember
that you’re likely to get the best rentals
at the same time you may want to use
the property, Christmas and Easter.
On the plus side, you can negatively
gear a holiday home, claim tax benefits
on the proportion of time the property
is available for rent and claim tax
deductions for running costs. #