There was once a time when the Australian dream was to own a family home on a decent sized plot. Nowadays the Australian dream is to have that, plus a second home by the sea. Why not? We do live on an island, after all.
A recent study shows that around 560,000 Australians (1 in 40) Australians already own a home by the sea, or a holiday home of some kind. Some other studies estimate that number is around 1 million.
If you’re thinking of buying a holiday home, is there are right or wrong time to do it? If so, when is that time? Read on and we’ll reveal all in our guide to the four best times to purchase holiday real estate.
1. Make a purchase when the market is flat
The nature of holiday homes is that often their prices are more volatile than those in other areas. When the economy is booming the price of holiday homes tend to be good, but when the economy is a little less affluent, those prices slump.
With holiday homes being a symbol of wealth, when people have loan repayments to make in a downturn, the holiday home is usually the first thing to go. That’s why we see so many houses for sale in a recession – holiday homes are somewhat surplus to requirement for our day to day lives. That’s why you should always try to buy one when the market is flat.
2. Buy off season
The holiday house market isn’t simply cyclical like the regular housing market – it relies heavily on the season too. Those prices tend to rise when during the holiday season, and recede when the tourists go home.
Apparently that’s because us Australians love to go away on holidays. When we’re on said holidays we fall in love with the area and decide to put down roots. In that sense, putting down a deposit on a holiday home is a statement that we might never want to head back to reality.
Sometimes we see prices rise and fall at random times of the year for reasons of supply and demand. This is normally because when there are more tourists viewing properties, the competition heats up and prices fluctuate.
Be aware that competition can be really fierce because people have a limited time to bag that holiday home before they have to head on home again! Remember – when you buy out of season, there’ll be less competition around to snap up your plot.
3. Look to buy during times of demand
When property prices are high, a second home isn’t usually on the cards. The closest people can get to owning a second home is if they rent one. If you fit the bill here, you need to remember that purchasing when there’s already a demand for property is key. For example if there aren’t many rental properties, you could be onto a winner, but if the market is saturated you may be looking at a struggle to make repayments.
A sound piece of advice would be to make sure you do the research beforehand. Go and speak to local real estate agents and find out how much you can expect to receive when renting out your property. Perhaps think about the occupancy rating too…
To do this you can head over to popular rental sites to gauge the level of supply and demand for the area and type of property you wish to invest in.
4. Only buy when the time is right for you
Buying a house is super exciting, but sometimes we can get caught up In the moment – especially on holiday. Normally this is great but emotion and business rarely mix. At least not in a very smart way. Don’t forget that a second house is quite a commitment.
Make sure that you do your maths first, ensuring everything tallies up. If you really can’t afford to buy a home by the sea, then don’t! Make sure you’ll be able to use it and get full value from its use.
It also depends on your stage of life. Some people find that renting may make more economical sense than straight up purchasing a holiday home.2`30
Purchasing a holiday home can be a wonderful experience, a fantastic investment, and a great way to spend time with the family. It’s important to remember these four steps to ensure you go about it the right way, instead of making a risky and unfulfilling investment.