Be wary of letting your heart overrule your head this holiday season.
Given the current property conditions, property in the traditional “holiday” areas are the first to suffer falls and often the last to recover when prices rise. In a recent report, RP Data National Research Director Tim Lawless said many property blackspots were “lifestyle markets” in regional coastal areas where demand had evaporated.
We all look at the real estate agents windows in the towns where we go on holidays and think it would be nice to live here; it’s cheap and there’s plenty of demand because it is so busy. The reason it’s busy because people are on holidays.
It’s common to let your emotions get in the way of making investment decisions. If you want to purchase a holiday home for your own family use then ensurethe decision is purely lifestyle. However, if you are considering buying an investment property that would also double up as your holiday house, then think again. I understand that you may love holidaying somewhere, but this doesn’t mean that you should invest in that particular location.
There are currently plenty of examples whereby the “holiday” areas are oversupplied and prices have dropped significantly. Areas like the Gold Coast, Port Macquarie and Bright are towns that are extremely popular with holiday goers but continue to face the downside of having too many properties for sale in markets that are driven by seasonal demand.
As property investment advisors, we focus on areas that have a stable supply and demand of properties, have a balanced mix between owners and renters and have sound, sustainable local infrastructure to support the area.
There are also many tax and finance issues that are particularly important to consider before you purchase property – and even more so when you consider buying in holiday spots where the rental demand is relatively low, or at best, volatile. A property tax accountant can advise you on how the ATO assesses rental income and the systems they use to determine if it is “genuine” rent from a “genuine” investment property.
By all means, go on holiday and have a great time – but leave your chequebook at home!
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