Bruce Morris: Time is on your side

Bucking general trends, this Te Puna Inlet, Northland, property sold for $5.3 million by Bayleys agents Sandra Peters and Esmae Farrington. Photo / Supplied

If owning coastal money is your dream, the time could be right to buy, but putting your money in the bank will give a better financial return, says Bruce Morris.

If coastal prices are now back at 2003 levels and still falling, doesn't that suggest this may be a good time to start sniffing out a bargain?

As always in the investment world - where the cashed-up are waiting to pick over the bones of the tired, the unfortunate and the reckless - seaside real estate may spell opportunity.

But in the end, it all comes down to your means and how much you want the property.

If you have the money and a dream of always owning a bach at Coopers Beach, Mangawhai Heads, Whitianga or Raglan - and don't think the appeal of holidaying in the same place, year after year, will fade - go for it.

But take your time because that is certainly on your side, and don't expect to make any money in real terms when you want to sell in six or eight years.

Get as close to the city, and the beach, as your money will allow. The right bach in the right place can fill picture albums and give wonderful times and memories, especially for families. But it can also become an expensive drain, with the chance of returning only enough short-term rental income to cover the overheads. The lost financial opportunity of the original investment is another thing altogether.

Paying $250 a night to hire a bach at the beach for a fortnight in January and another two weeks during school holidays will cost $7000 and seem a crazy expense for a family. Share with friends and it may seem more manageable, even more so if you can rent out of peak periods.

But if you've been left $350,000 by dear granny and decide to buy a Coromandel bach, remember that the same money will return at least $15,000 a year in the hand in a simple 5 per cent bank term deposit. Rates, maintenance and insurance will likely push the annual burden to something like $20,000. Of course, if you need to borrow to buy that bach, the costs will be much higher.

In the end it's a personal decision, linked directly to your wealth and what you want out of life.

It's why some of us drive modest Japanese imports and others of us cruise about in BMWs.

* From the New Zealand Herald's quarterly 'Property Report' - a guide to house prices and great places to live.