A time of unprecedented economic recession may not seem like the most logical moment to purchase a holiday home – particularly as they have often been considered a questionable investment – but the COVID-19 pandemic appears to be influencing buyer’s property priorities.
The transition to working from home and limiting time spent out of the house – particularly for those in city-centres worst hit by coronavirus – has forced many Australians to reconsider what is important to them, and holiday home sales are benefitting from this priority shift.
AFR interviewed a number of property experts and buyers, seeking further insight into the increasing interest in holiday homes. "Historically, during economic downturns, the holiday areas suffer the most, although that may change as people have realised in this COVID environment that they could easily work anywhere in the world due to modern technology," says tax expert, Adrian Raftery.
As the ability to travel has been severely limited, purchasing a holiday house that can be reached by car is becoming an increasingly attractive prospect.
"We bought a holiday house purely because of COVID and because we could no longer travel overseas or interstate," says Ms Maguire, co-founder and executive director of The Capital Network.
"Our business is set up for us to be able to work from home, and given the change to a remote workforce, we saw the opportunity to have a holiday home or an alternative residence where we can enjoy the best of both worlds and continue to grow our businesses."
Economists are reporting that the increased interest in purchasing a holiday home has already started to push property prices up in popular destinations, such as the Whitsundays, Huon Valley and Byron Bay.
Data shows that median house prices in Byron Bay have increased an incredible 41 percent in recent months, and 15 percent in Huon Valley – compared with the first quarter of 2020.
Whitsundays prices increased by 28 percent, and prices in the Southern Highlands experienced a 23 percent rise.
Vacancy rates are impressively low in these areas, with all falling under 3 percent and some as low as 1 percent.
Destiny Financial Solutions founder Margaret Lomas has explained that there is still increased risk involved with purchasing a holiday home, as holiday towns typically do not perform as well as non-tourist areas from an investment perspective.
"A holiday home is far less likely to contribute to your overall wealth than other property investments, even though it may contribute to your lifestyle while you own it," she said.
"It attracts a range of taxes because it's not your primary residence, and it's costly to maintain. In recessionary times, when people aren’t travelling, the income can suffer too, so you end up with a property with poor cash flow that doesn’t grow in value, in an area that you are tired of holidaying to."
Experts are advising that buyers not to make any overly-spontaneous decisions when it comes to buying a holiday home, even though it may seem like an incredible idea as we remain cooped up in our suburban or inner-city homes.
"Holiday areas are seeing artificially high occupancy as overseas travel has been halted and everyone is holidaying in their own backyard," Lomas continued.
"This won’t last and the short-term pressures might make an average investment look far better than it will turn out to be. Now is not the time to buy holiday homes."
Some buyers are making a permanent sea-change or tree-change, inspired by their altered living conditions due to COVID-19. The prospect of being able to work from home permanently has allowed for greater flexibility when it comes to where people can live - increasing the possibilities for many Australians to move away from large towns and cities.
This holiday house buying phenonium will be interesting to watch play out as the conditions and restrictions pertaining to the pandemic continue to change.
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