Is it time to buy a bolthole?
Agents tell one story about when to buy a bach while economists tell another, writes Colleen Hawkes.
There is plenty of anecdotal evidence that Kiwis have emerged from lockdown with a desire to follow up on long-held dreams. And owning a bach is one of them.
The idea of having a bolthole to escape to when the going gets tough still holds plenty of appeal.
A bach in the Marlborough Sounds that sold at auction just as the level 3 restrictions were lifting is a case in point. It sold amid ‘‘spirited bidding’’ from 10 interested buyers.
Bayleys Marlborough real estate agent Jeremy Ryan said it was his first post-lockdown auction and the 10 potential buyers had been whittled down from 68 inquiries, some from Dunedin, Auckland and overseas.
The waterfront Kenepuru Rd property had 36 physical inspections before and after lockdown, he said.
And LJ Hooker Ponsonby manager Steven Glucina reported several offers on the first post-lockdown weekend of open homes, for a unit in a resort development in Waiwera.
‘‘One potential customer in his 70s said he and his wife normally do a lot of overseas travelling and they had a damned good think and decided they wouldn’t be doing that for a while, what with the hassles involved and crowded planes.
‘‘So they have decided to look for a place where they can go for the weekend, where they don’t need to travel far.’’
Caution urged
But is it really a good time to buy a bach (or a crib if you’re from the deep south)?
David Nagel, general manager of property analytics provider Quotable Value, speaking to Stuff, said he would be cautious if he was seeking to buy a property and relying on short-term income from Airbnb rental.
Although he also said Airbnb operators are reporting high levels of inquiry to 80 to 85 per cent of pre-Covid levels, ‘‘which is encouraging’’.
Nagel also said he wouldn’t be rushing to secure a holiday home at this time. ‘‘There’s likely to be more stock to choose from as we head towards Christmas. So unless you see a property you love and it ticks the boxes, then I’d tend to wait a while longer.’’
Economist Tony Alexander agrees with the cautious approach. ‘‘Businesses do have some cash flow at the moment with the government relief, but that could well change. In a recession, small business owners need capital, so one of the first things they’ll sell will be a holiday home. And I would expect a pullback from buyers as well.
‘‘If I were looking to buy my bolthole, I would be taking my time. But it could be something to be looking at later in summer.’’
Alexander said, anecdotally, he has heard of increased interest in lifestyle blocks for sale post-lockdown, including from Kiwis looking to return from overseas, and he was not surprised.
‘‘During lockdown, people have had the time to spend online, and they have seen things [properties] and come up with an idea. And one can easily see the logic of it – it would be good to have a bolthole.
‘‘But that will likely fade as they get busy again [with normal work and family commitments].’’
However, Johnny Sinclair, national director residential at Bayleys, said there’s never a bad time to buy a waterfront property. And he says prices and interest have held up post lockdown ‘‘without a doubt’’.
‘‘People now have confidence they can run their business remotely, which is helping,’’ he said. ‘‘Our Waiheke Island manager says it’s common practice for bach owners to work four days in the city, then work the fifth day from the bach.’’
However, Sinclair noted, if you are wanting prime waterfront real estate that’s not too remote, you won’t get much change from $4 million. But low interest rates are helping.
‘‘It’s more achievable than ever before,’’ he said. ‘‘If people have security in their jobs, they can service a $1m loan with $26,000 of interest [annually] for just a little over $500 a week [interest only]. And they can easily get that back by renting it out one or two nights now and then.’’
Sinclair also believes the government’s decision to relax the size restrictions on DIY builds in backyards, effectively allowing large sleepovers to be built without permits, will appeal to bach owners.
Ray White chief executive Carey Smith agrees the holiday home and bach market is holding up well, with evidence of ‘‘an increase in buyer activity and inquiry numbers’’.
‘‘While the traditional tourist markets have had a change in tourism activity, there’s been ongoing inquiry for well-located bach properties.’’
Multiple offers post lockdown
Rochelle Carter, owner of Ray White Pukehina, said she has seen a surge in inquiries post lockdown.
‘‘We had one beachfront unit – a lovely two-bedroom home with large garage and decking – that had been sitting on the market for six months. Then suddenly in level 2 of lockdown, I had multiple buyers coming in to look from out of town. The property now has an unconditional offer at the $750,000 asking price, and the purchaser intends to reside here permanently.
‘‘We are getting a lot of inquiries from Auckland, with people wanting to get out of the city, and my expectation is that sales volumes will be steady and values will increase modestly [in the region]. Auckland money will continue to fuel these increases.’’
Another home on Pukehina Parade has just sold to an out-oftown buyer who wanted to be mortgage-free. That property had good interest pre-Covid, but multiple interest through lockdown. It went unconditional on the second day of Level 2 lockdown, and sold for $1.1m.
‘‘That’s the hype we are seeing at present,’’ Carter said. ‘‘We have the lifestyle in Pukehina everyone dreams of, so essentially stock is selling rather quickly.
‘‘We are seeing positive growth and better returns on investment with a short supply of rental accommodation. Properties in the higher price bracket are attracting betterqualified buyers and achieving premium prices with multiple interest.’’
‘‘If I were looking to buy my bolthole, I would be taking my time.’’ Tony Alexander Economist