Diana Clement: All coasts are not created equal

Baches don't have to be coastal to earn income. Often it's simplicity and remoteness that holidaymakers want. Photo / Getty

Buying the bach has always been a Kiwi dream. It's ingrained in our psyche. But the coastal markets, where most baches are found, wax and wane and don't necessarily follow the same cycle as the cities.

Thomas Ujdur, senior consultant at QV, says the current summer season hasn't been as hot as the 2015/16 and 2016/17 seasons on the bach market front.

"The purchaser interest is still there, but agents report difficulty in getting the signature on the dotted line for properties in the more remote locations, and especially in the higher price brackets," says Ujdur.

It seems buyers are taking the wait-and-see approach with holiday properties — and most vendors not willing to drop below the current market level to achieve a sale, he says.

In late January, when newly returned holiday makers were dreaming of what they could buy, Realestate.co.nz had 53 properties listed from Rodney to Cape Reinga with the word "bach" in the listing.

Prices ranged from $169,000 for a leasehold two-bedroom bach at Hugh Barron Way, Whananaki, to $3,850,000 for an "iconic Kiwi bach plus 40 acres" at Cable Bay.

Northland isn't just one market. It's many. It's a little over an hour's drive time from Kerikeri to Kaitaia, but they're a world apart as real estate markets.

There is a distinct premium to be paid for the white sands of the east coast, says Bayleys research manager Ian Little, whose research in 2016 found that buyers were paying almost double at east coast beaches compared to a similar-sized piece of black sand terrain on the west coast.

Exceptions to that rule in Northland include Opononi/Omapere, which offers sheltered swimming in addition to bigger surf breaks.

In terms of price rises, the Far North District saw 11.8 per cent average price rises for the year to December 2017, Whangarei district 9 per cent and Kaipara 6.2 per cent.

Dennis Corbett, managing director of Harcourts Bay of Islands, says the question of what constitutes a "bach" comes up in his office regularly.

Traditional 60-80sq m baches still exist on the Karikari Peninsula, for example, and can be picked up for $200,000 or less. But there are $3 million and $4 million houses in Corbett's patch, which bear no resemblance to the fibrolite baches of the past.

Corbett says, unlike Auckland, Hamilton and Tauranga, Northland markets have experienced single digit increases in the last 10 years. "It has been consistent steady growth. You are not buying (into) a bubble," he says.

Independent economist Rodney Dickens, who runs Strategic Risk Analysis, says the proximity to Auckland of Northland's coastal property markets has played a significant role in determining whether they still offer value or have become expensive on a relative national basis.

On the more desirable east coast, there is still some value, says Dickens. In the Mangonui area, which includes Cable Bay, Coopers Beach, Karikari, Taupo Bay and Whatuwhiwhi, the median dwelling price is below the New Zealand average, whereas it rose above it in the last decade.

"Local prices are still at a somewhat larger than average discount to the national average price, which is consistent with the market still to some extent absorbing the huge increase in supply last decade. But the percentage discount has narrowed significantly in the last 18 months," says Dickens.

Before the boom that started in earnest in 2004, local prices had been at an average 32 per cent discount to the national average price in this area, whereas in the last year they were at a 48 per cent discount," he says.

Dickens adds: "If local prices were at a 32 per cent discount to the national average of $243,000 over the last year, the median price would have been $165,000 rather than $125,000."

This suggests that local prices in the Mangonui area are still cheap on a relative basis, he says.

It's not black and white, however, because changes in the composition of sales can impact median prices.

In Paihia and surrounds, REINZ figures for existing dwelling and section sales suggest the area still offers reasonable relative value compared to the national averages, says Dickens.

However the Otamatea area — which includes Kaiwaka, Mangawhai and Kaipara district — is now expensive on a relative national basis, which may come down to the proximity of Auckland factor.

The coastal areas of Whangarei Country have "no value", says Dickens, which means bach buyers aren't likely to get a bargain.

With the proliferation of booking websites — such as Bookabach, Airbnb and Booking.com — more and more owners are earning an income.

Dave Collins, who rented his Mangawhai bach through Holidayhouses.co.nz for three years and now runs agency Bach Stay Mangawhai, says even an average bach can earn $10,000 to $20,000 a year.

Whether the rental covered a substantial amount of costs dependied on the size of the mortgage, but it covered a sizeable amount, he says.

The advent of Airbnb has seen even cabin owners starting to make a good secondary income.

But there could be some clouds on the horizon for bach owners. Ujdur says he would assume that the secondary home/bach market will be affected by the Labour Government's property policies looking to steady property markets across the country.

"The auction market in Auckland has slowed and periods of no growth or slight decline have been recorded in some locations," he says.

The flow on effects of negative growth in Auckland are traditionally felt in Northland soon after, with the bach market generally taking the biggest hit in values.