If a holiday home has always been a dream of yours, now may be the time to make that dream a reality. Analysis done by the Real Estate Institute of New Zealand (REINZ) shows that while house prices around the country may be on the rise, the same is not necessarily true for some popular holiday locations. The latest REINZ statistics reveal that some holiday hotspots are now more affordable than last year.
Here's what to consider if you are looking to buy that holiday home you've been dreaming about:
Be clear about what you want from your holiday home
Are you buying a holiday home with an eye towards capital gain, do you want to break even or cover your mortgage through rental income, or do you just want a place where you and your family can live the Kiwi dream of endless summers spent at the beach? Be clear about what your expectations are before you start looking.
Find the right property
Finding the right property at the right price can make all the difference if you're planning to rent it or hoping to achieve a capital gain when you sell it one day. Historically the country's most popular holiday rental properties are within easy driving distance of major metropolitan areas, places like the Coromandel, Wairarapa and Bay of Islands.
Shopping around can pay dividends. The latest REINZ data shows that in Paihia, gateway to the Bay of Islands, affordability has increased, with median prices for the three months ending November 2019 13% below the same time last year. Even places like Waiheke Island, Wanaka and Pauanui have seen prices drop back over the past year.*
If you want to maximise your holiday home’s rental income, look for an area that has year-round appeal, like Queenstown or Taupo. Alternatively, you could look in less expensive areas that have strong seasonal appeal, like Ohakune or Gisborne.
Make sure the financial stack up
It can be a good idea to arrange your finance before you begin the holiday home buying process. This will give you a better idea of what price range you can purchase in. It can be beneficial to involve a mortgage adviser to arrange finance on your behalf.
A mortgage adviser will assess your personal and financial situation and make an appropriate recommendation. You can discuss the different types of loan structures and interest rates available and because mortgage advisers deal with a number of different financial institutions, they can provide a range of solutions that best meet your personal circumstances.
If you plan to rent your bach during peak times, it's possible your rental income may cover most of the mortgage costs if it's in a good location and well presented. Understanding your finance options before you buy will give you a clearer picture of what those costs will be.
For most people, buying a beach house or holiday home is about having a place to unwind and create memories with family and friends. Whether or not a holiday home is a good investment ultimately comes down to the value you place on the convenience and familiarity of owning a little slice of the Kiwi dream.
If you'd like to contact a mortgage adviser to explore your financing options, go to mortgage-express.co.nz
This article is featured in Harcourts' Property Focus Newsletter Issue 1, 2020.
*Source: Despite rising house prices, some holiday hotspots now more affordable says REINZ, 23 December 2019.
Disclaimer: The views and opinions expressed in this article are intended to be of a general nature and do not constitute a personalised advice for an individual retail client. Before making any investment decisions, you should consult a Mortgage Express Limited financial adviser. A disclosure statement of the Mortgage Express Ltd financial adviser is available, on request and free of charge. Harcourts is a majority shareholder of Mortgage Express Limited.