Reality behind the dream

Buying a getaway may seem like a great idea after enjoying an idyllic vacation, but does it stack up financially?

- NICOLA FIELD

Owning a holiday home is a goal for many people. However, in the past it was a luxury limited to the lucky few. Back in 2014, 560,000 Australians owned a holiday home, and Melbournians were the biggest enthusiasts, with one in 20 owning a getaway.

That was before interest rates hit rock bottom and online platforms like Airbnb and Stayz made it easy to rent out holiday homes, potentially turning them into money-spinners.

While Covid-19 lockdowns put a temporary dent in the short-term rental market, vacation homeowners in popular tourist destinations have been compensated by exceptional price growth.

CoreLogic’s quarterly regional market update shows that in the 12 months to January 2022, house values in Kiama, a popular tourist destination on the NSW south coast, have soared 43.9%. It’s taken the median value to $1,633,086. To put this in perspective, in the 1990s it was possible to buy a home in the Kiama area for less than $140,000.

Other favourite vacation destinations that have performed well over the past year include Byron Bay, where house values are up 30.2%, the Gold Coast (up 36.3%) and the Sunshine Coast (35.4%).

These skyrocketing values haven’t just been driven by demand from holidaymakers. Data from the Commonwealth Bank reveals quarterly migration from capital cities to regional areas over the past two years is averaging 15% higher than in the two years before Covid.

It raises the question, is a holiday home still a good investment? And if you own a vacation place, is now the time to cash in?

Rentals look healthy