There was a time when the great Australian dream was a family home on a quarter acre block. Now it seems the Aussie dream extends to a second home by the sea.
One study shows that 560,000 thousand Australians, or one in 40 of us already own a holiday home. Others put that number closer to a million.
But if you’re thinking of dipping your toes into the water and buying your own holiday home, is there a right and a wrong time to do it? You bet there is.
Here’s a guide to the four best times to buy a holiday home.
1. Buy when the market is flat
Property prices in holiday areas are often more volatile than in other areas. In other words, when times are good prices tend to boom and when times are tight, they tend to collapse.
That’s because when people are stretched on their loan repayments – if they lose their job, earn less money or even if interest rates go up – the first thing to go is usually the holiday home. So in recessions, seeing multiple houses for sale on the one street of a holiday town is not uncommon.
For that reason, you should always try to buy a holiday home when the market is flat. That’s easier said than done but, when the market’s high, the risk is much higher too.
2. Buy out of season
The housing market in holiday areas isn’t just cyclical, it’s seasonal too: prices tend to rise during the holiday season and fall back when the tourists aren’t around.
That’s partly explained by the sheer number of Australians who go away on holidays, fall in love with a place, and never want to leave. Putting down a deposit on our holiday house is in some ways the ultimate expression of never having to go back to reality.
The housing market in holiday areas isn’t just cyclical, it’s seasonal too.
But prices also rise and fall in different seasons simply because of the laws of supply and demand. When more tourists are around there are more people to view properties. So the competition for properties heats up.
And, given that people have only a certain amount of time to snare their place before they have to head back home, that competition can be fierce for good properties.
When you buy out of season, you’ll have fewer people around and more time to ensure you’re making the right decision.
3. Buy when there’s already demand
Let’s face it, with property prices so high, the only way many people can get close to owning a second home is if they rent it out for most of the year. So if you fall into this category, it’s vital that you buy when there’s already demand for properties in a particular area.
If there’s too many rentals in the market you’re buying in, or if you’re looking to buy in a place that’s a bit off the beaten track, you may struggle to meet your repayments.
So do your homework before you buy. Speak to local agents and do your own independent research to find out how much you can expect to receive if you rent out the property and also what your likely occupancy rate will be.
Make sure you buy only when there’s a ready market for the property you’ll be renting out.
4. Buy when you’re ready
As mentioned, it’s easy to get caught up in the emotion of holidays and suddenly buying a second home on short notice can seem like a great idea.
But, even though a holiday home is often going to be an investment from the heart, it’s important that you bring your head into the equation.
Do your sums first and make sure it all adds up. Don’t buy a holiday home if you really can’t afford it or if you’re unlikely to use it enough to get value out of it yourself.
Given the ongoing cost of owning a second home, it can be cheaper to stay in five star accommodation for weeks on end, rather than buying your own property.
You may find at certain stages in life you’d be much better off renting a holiday home rather than buying one.
Buying a holiday home can be a fantastic investment and one that enriches the lives of your whole family. But there’s a right time to go about it, as well as a right way to do it.
For any real estate need either Buying or Selling or Investing , contact me either via email or phone given below.