Time to buy, not book, a bach?

Punters wanting to own a holiday home may be able to snatch some good deals this year, but watch out for looming tax changes.

Rodney Dickens, of property research firm Strategic Risk Analysis, says there is an over-supply of subdivided sections in popular holiday spots; Coopers Beach, Cable Bay, Karekare Peninsula, parts of the Coromandel, Raglan, Kaikoura and the South Island's West Coast.

During the investor-driven boom of 2004, many of these areas built up a volume of sections and houses way above demand from local residents or potential buyers.

Now, many of the investors are trying to sell out of the properties.

Some houses and sections had been on the market for six years. But prices still aren't reflecting the underlying lack of demand, he says.

''Over time I expect the section prices to grind down and that will have an impact on house prices.''

Realestate.co.nz chief executive Alastair Helm says Queenstown is picking up in terms of inventory, but not sales.

''There was a big surplus of stock in Queenstown in 2009, but it sold off pretty well. But towards the end of the year and beginning of this year, it's coming back again.''

Trade Me head of property Brendon Skipper compared the listings and expected sales prices between October and December this year to the same period in 2008 in several popular holiday spots - Coopers Beach, Golden Bay, Marlborough Sounds, Matarangi, Onetangi and Wanaka.

The results were a mixed bag.

Listings were significantly down - an average of 55 per cent - and prices were down in some areas, too, such as Golden Bay (43 per cent) and Coopers Beach (7 per cent).

However, prices in the Marlborough Sounds had increased 29 per cent and Wanaka was up 20 per cent.

People are, at least, windowshopping for houses. The website recorded 1.1 million visitors to Trade Me Property in January, up 40 per cent from the same time last year.

Holiday homes could also be subject to the Government's proposed tax reforms on property. This may force vendors to sell property, observers suggest, but there are no signs of it yet.

Mark Greening, co-founder of the firm Baches and Holiday Homes to Rent, says: ''People are sitting tight, holding their breath and hoping the Government will back off.''

He personally owns a bach in Golden Bay and intends keeping it because it's a ''have your cake and eat it'' type of investment, with emotional ties rather than strict financial-return criteria.

Lesley Preston, who owns holiday home rental and management firm Bachcare, says she doesn't know of anyone planning to bail out in the face of tax changes.

Rental bookings rose 30 per cent over the summer from 2008, she says, as Kiwis opted for holidays closer to home after a year of economic uncertainty.

- © Fairfax NZ News