Most of us have done it: gone on holiday and fallen so much in love with the destination we dream of buying a home there. And while any decision to buy may be for lifestyle reasons, a holiday home can also be a great investment through either renting it out or capital appreciation.
Some of Australia's most popular holiday spots include Victoria's Mornington Peninsula, NSW's Byron Bay and Queensland's the Gold Coast. Domain data scientist Nicola Powell says many of the more popular holiday destination areas have experienced significant price increases in the last few years..
Powell adds one trend is that those who buy holiday homes to rent out are moving more towards shorter-term leases for tenants.
"In Mornington Peninsula, for example, rents are rising for longer-term leases, which is a reflection of the dwindling stock as more people choose to put their homes up on platforms such as Airbnb," she says. "Investors have a lot of competition because of the rise of leasing platforms."
Geoff Oxford, director of Mornington Peninsula agency Seachange Property, says the area remains fantastic value.
"Around 15 years ago, 70 per cent of homes in Mount Martha were holiday homes," he says. "Back then it was very affordable but the gentrification over the past 10 years has seen a huge increase in permanent livings. A lot of people might buy a very pleasant home with a pool that they use as a holiday home for the next five to 10 years with a view to downsizing or having a seachange in the future."
Oxford says because of the capital growth, the Peninsula is probably more expensive than it's ever been, especially if the sole purpose is to buy just as a holiday home.
"But if purchasers have a view to eventually move here then it's great for capital growth," he says. "The rental yield is fantastic if they are going to do holiday letting as there's not a lot of accommodation in Mornington and Mount Martha."
He says good growth is still possible in the area. "Rosebud is the hotspot now," he says. "It has great swimming beaches and a great lifestyle and is still very affordable. In my mind Rosebud is the best investment on the Peninsula."
James Young is CEO of First National Byron Bay. He says while there was a "bit of a hiccup following the GFC", capital growth for holiday homes in the area has been strong for the past 20 years.
"We believe holiday homes still offer the potential for good growth," he says. "We have a very green council and there aren't many development opportunities happening here so what you see today is what you're going to get in the future. We also expect to see an undersupply of properties in this area while at the same time there will be an increase in demand from people who want to live here."
Young says people tend to buy holiday homes and rent them out when they're not here.
"The yields are very good on these properties," he says. "It is a popular destination so that people who buy get a good capital gain and a decent yield - even if they're not making money by renting them out, they are covering costs."
One of the main reasons people buy holiday homes in the area is because they want to move here permanently down the track. "It's not just Byron Bay," he says. "The Northern Rivers has seen a lot of growth over the past two years. Byron is the hub but places like Ocean Shores, Skennars Head, Mullumbimby, Lennox Head and Ballina all offer wonderful lifestyles and are attracting holiday buyers who are after an investment but also a lifestyle choice for later on."
The Gold Coast
The Gold Coast neighbourhood of Broadbeach is another attractive location for holiday home buyers who like the warm weather, relaxed lifestyle and amenities, which include plenty of cafes and good transport links.
Leighton Pyke, development director with Little Projects, says interest in the area comes from what he calls "lifestyle investors", particularly from Sydney and Melbourne where recent consistent price growth means prospective buyers are in a good position to free up equity in their homes and buy in the area.
Pyke says Broadbeach is the premier location on the Gold Coast seaboard.
"It's centrally located among the Gold Coast's best amenity offerings," he says. "As the Casino continues to expand and the Pacific Fair shopping complex attracts international brands, Broadbeach will cement itself as the undisputed centre of the city."
He adds there is a distinct value-for-money factor when compared with Sydney and Melbourne.
"We are seeing people from Sydney and Melbourne buying an investment or a second home and relocating to enjoy the Gold Coast's spectacular weather for an unrivalled lifestyle or retirement," he says. "The Gold Coast currently has a 1.9 per cent vacancy rate, which is attractive to those who want to rent out their holiday home while not using it."
Little Projects is the developer behind the Signature complex at Broadbeach, which is located just 150 metres from the beach and features a collection of one, two and three-bedroom residences across 35 levels. In a first for the Gold Coast, the development incorporates a residents' deck with a 50-metre infinity pool positioned to ensure it retains the best of the Gold Coast light throughout the day.
"Signature will offer more amenity than any other residential building on the Gold Coast," says Pyke.