Experts warn of increased risks in bach market
Recent data from realestate.co.nz showed a significant rise in the number of holiday homes, or baches, for sale in New Zealand’s favorite retreats like Coromandel and Pauanui.
This trend is emerging as economic conditions tighten, with Vanessa Williams (pictured above left) of realestate.co.nz noting that the rise in listings is likely due to higher living costs and interest rates.
Pauanui, for example, has seen its listings swell from 10-15 during the post-COVID market peak to about 65 currently, RNZ reported.
Market dynamics: A buyer’s perspective
The increase in second home listings is not without consequences.
Properties are lingering on the market longer in Coromandel, one of the few regions alongside Northland seeing a decline in new listings but a 15% increase in stock.
Nick Goodall (pictured above center) from CoreLogic observed that baches are often seen as luxury items, hence the first to be released when owners need liquidity or wish to improve their equity positions amidst economic pressures.
Caution advised for potential buyers
With the shifting dynamics in the bach market, economists like Ed McKnight (pictured above right) from Opes Partners advised against impulsive purchases based on temporary life circumstances, RNZ reported.
McKnight suggested that instead of buying a bach, potential investors should consider renting through platforms like Airbnb and possibly investing in a permanent property elsewhere.
He emphasised viewing a bach as a lifestyle asset rather than an investment, warning that the desire to own a holiday home might not translate into practical or frequent use.
Lifestyle considerations for bach ownership
However, for those deeply invested in certain activities like fishing or skiing, owning a bach could still make sense.
Proximity to favorite lakes or ski resorts can enhance the convenience and enjoyment of these hobbies, as highlighted by scenarios where owning a property in locations like Lake Taupō or Ohakune aligns with frequent use and lifestyle satisfaction.
Long-term considerations and potential pitfalls
The appeal of owning a bach can be compelling, especially when properties appear affordable.
However, McKnight warned of the long-term commitments and occasional disappointments, such as underuse due to distance or life changes.
He stressed the importance of realistically assessing use patterns and not being swayed by seemingly low property prices without considering the total cost of ownership, including maintenance, taxes, and potential resale difficulties, RNZ reported.
As the market adjusts and more baches become available, potential buyers are urged to think carefully about the long-term joy and practicality of owning a holiday home in these beloved yet often remote locations.
