Potential sea changers should be on alert for any poorly built or poorly performing properties that hit the market in coming months, amid skyrocketing interest in buying property in Australia’s favourite holiday destinations.
Be warned of bargains that look too good to be true and think carefully about long-term work arrangements when dreaming of a post-covid lifestyle change, buyers agents say.
Many coastal hot spots were previously sought after for holiday homes or by retirees, but since the pandemic hit there has been a spike in home buyers from capital cities seeking a permanent change of address.
Lauren Goudy, a buyer’s agent at Rose & Jones in Sydney, advises anyone looking for a beach house or a permanent sea change to “not get caught up in the hype” and warns homebuyers with city budgets to do their “research first.”
“Buyers do have to be discerning to avoid paying too much for the wrong property, especially if you are coming from another area or from the city, as you can get burnt in these markets, if you don’t know them well,” she said.
She says tapping into local knowledge is key.
“You need to look for what attracts buyers in the particular market you are buying into. Do you need to be close to the shops or if you’re looking in somewhere like the Byron Shire, for example, should you be looking up in the hinterland area because the town has become too congested? You need to talk to as many local agents and people as possible,” she said.
Miriam Sandkuhler, of Property Mavens, Melbourne, agrees, adding that as appealing as a holiday hot spot might be, the return on inner-city property is likely to be greater in the longer term.
“Beach homes are likely to underperform prime, inner-urban property, which benefits from broad based demand from many different types of buyers and tenants,” she says.
“Having said that, you can do well with beach homes as long as you carefully select areas with broad based demand from buyers and tenants, including share house holiday makers.”
With the spotlight currently on popular sea change and tree change towns, “plenty of vendors will be looking to offload poorly built, poor performing properties in the next few months”, Ms Sandkuhler warns.
She says there are several key things you should consider when buying a home in a holiday hot spot.
“If you do move to the coast, look at towns with a variety of economic activity and good transport links to Melbourne,” she says.
She also says “your property should be within 2.5 hours’ travel time” to the city and within “10 minutes’ walking distance” to the town’s shopping village, and warns buyers off any “bargains” that look too good to be true.
“In Victoria, the Mornington Peninsula and the Surf Coast are best placed to perform over the long term. But beware the hype. Headlines about everyone moving to bush retreats may well fade,” she says.
Jarrod McCabe,of Wakelin Property Advisory, warns would-be lifestyle changers to carefully consider their long-term workplace arrangements before leaping into a property purchase in a holiday hotspot.
“Life in 2020 has been quite clearly abnormal and the reality is it’s not going to stay that way. When things start going back to normal there will be some businesses that will want people back in the office five days a week and other businesses who will continue to offer that flexibility of working from home,” he said.
“It’s also good to think about things like what it might be like to be the only person that’s not working full-time in the office and if you will be working from home, does the house have a home office space and is the internet fast enough,” he says.
Even in a market where prices in some regional towns are rising quickly, McCabe suggests trying before you buy, renting for six to 12 months.
“It’s an expensive mistake to find out that the lifestyle change that you dreamed of isn’t what you thought it would be, particularly if you’re selling something in the city, because it could be difficult to get back into that metropolitan market again,” he said.
“It helps you get a feel for what the community is like and even for things like do you want to be closer to the beach or the town centre, or do you discover there’s another beach you want to be close to?”
Jacqueline Dwyer, of Savvy Fox, a buyer’s agent and property valuer working on the Gold Coast, Brisbane and Byron Bay, says she has never seen such high demand for properties in the popular coastal markets, largely driven by southern state residents with Sydney and Melbourne budgets.
Ms Dwyer says despite increased competition driving up prices in some areas, she still recommends would-be sea changers to “purchase a holiday home for their own personal use, with a view to moving into it long term, and in the short term putting it in a holiday letting pool and enjoy solid yields year round.”
For those looking for properties they can lease out to holidaymakers, Ms Dwyer recommends home buyers look for properties that are within walking distance to the beach, as well as restaurants, cafes and bars. She says a pool is also desirable.
“When you are on holiday, people want to limit having to get in the car to enjoy the beach and local amenities. The homes that are the first to be let for short term accommodation have this trifecta of characteristics. Next, I would recommend homes with as many bedrooms as possible as often extended families or friends holiday together. You can always renovate a property so location is key when making your final decision,” she said.
Ms Goudy reiterates the need to “go back to the fundamentals of good investment” when considering buying in a holiday hot spot.
While she expects property prices in many popular sea-change destinations to increase over the next year, as city dwellers continue to seek out a post-covid lifestyle change, she admits long-term growth is expected to be lower than in many prime city areas.
“I think a lot of these hot spots are going to have continued growth this year, but I do think it will plateau and they’re not likely to grow at the same rate as Sydney’s prime market,” she says.
“That’s why it is important that people know the market they’re buying into to make sure they avoid paying too much, while there is a lot of hype around some of these hotspots.”