Welcome to 2024, I hope everyone is having or has had a grand ol’ break, I think after 2023 we all needed it.

From a property perspective, there is little that happens over the summer break. This is really the only time of year that the market comes to a full stop, except of course if you are along the Surf Coast or Bellarine tourist hotspots.

Traditionally, our coastal hamlets all have a dramatic increase in population over this period, and local agents are busy showing new perspective buyers through coastal dreams, be that for a holiday home or permanent occupation. These poor souls are the only agents that are working!

It is so easy, while walking down to get your holiday coffee at 10am, to stop and take time to look in the agent’s windows. The mind starts ticking, and the next thing you know, you are seriously considering a holiday home! Let’s take a closer look.


  • Living by the coast is an amazing lifestyle, morning beach walks, yoga and better coffee!
  • Owning a holiday home means you have a real reason to get up and go, you don’t need to pack much because you are already setup, you will get away more often
  • You don’t feel like you are spending money, because you’re just paying a mortgage, and you are not getting the big rental bill each time you hit the road
  • Investment (well, is it?)
  • Income from rental (does that offset the holding cost?)


  • Groundhog day; you are locked into going to the same place every year
  • Maintenance/cleaning; don’t expect to turn up and have your beds made and lawns mowed!
  • Expense of setting it up: furniture, utensils, and entertainment
  • Management costs of renting it out when you are not there
  • Use it or lose it! Peak time! The irony of owning a holiday home is that when you want to use it, so does everyone else, including your own family!

So, is it a good investment? This is highly dependent on rental income that can be achieved to offset holding costs and mortgages, and a reliance on capital growth. From a rental perspective, the highest yielding is short-stay or Airbnb. However, as you will see, this doesn’t really stack up from a purely cash perspective. Here is a quick calculation for a $2 million purchase in Lorne at average rates for a three-bedroom home presently advertised on Airbnb:

  • Purchase price – $2,000,000
  • Mortgage – 80 per cent
  • Interest – 5.50 per cent
  • Mortgage payments (interest only) – $88,000
  • Short-stay rental income (rental rate/occupancy):
  • Rental Peak (per night) 75 nights per year – $470/85 per cent
  • Rental Shoulder (per night) 100 nights per year – $350/75 per cent
  • Rental Off-Peak (per night) 190 nights per year – $200/65 per cent
  • Average annual rental – $80,912.50
  • Less management fees (15 per cent) – $12,136,88
  • Net income annually – $68,775.63

Net bank position annually – -$19,224.38

You may be able to claim the interest from your investment property, and the benefit of this will depend on your personal taxation situation. This may improve your overall investment, but for simplicity sake, let’s see what else you can do with $20,000 cash?

A week at Big4 Apollo Bay in the peak season will cost you about $3,500. A package for seven nights to Bali currently being offered by Qantas, five nights for $1,767 per person, so for a four-person family that’s $7,068 (kids eat free). What about Gold Coast, Byron Bay or even a week in Darwin (which looks awesome)? All of these options will leave you with plenty of change in your pocket from the $20,000.

What about capital growth? This is crucial in the decision, it’s the only part of the equation that can make a real long-term difference, but you will only yield the benefit on sale, and not all markets go up. This is a long-term decision, and you should be looking at a minimum seven-year holding term, or one market cycle at the very least. The average price for a home in Lorne seven years ago was $1.14 million, it is now $1.90 million – that’s a capital benefit of $760,000 or after CGT $480,000 (approximately). This is $68,600 per annum, less your loss of $20,000; you are up about $48,000 per year. Not bad at all, but we haven’t paid the loan back, and we didn’t calculate in principal reductions on the loan.

So, you need to think really carefully about investments in holiday homes. Coastal property markets are seasonally volatile; they do not always go up! As we have demonstrated, the net benefit is earnt over a long period, so once you have made this decision you are locked in. Food for thought.

Happy new year everyone and enjoy those holidays.

This article written by Gareth Kent appeared in the Geelong Times on 18th January 2024.