- South west regions such as Busselton, Mandurah and Yallingup have continued to recieve interest from VESPA's
- Coined by Bernard Salt, VESPA stands for 'Virus Escapes Seeking Provincial Australia'
- Legal advice should be seeked given the complex nation of taxing a mixed property
There is a growing sector of the property investment market who are seeking and purchasing properties that double as an investment and holiday home.
The popularity of the southwest regions, namely Mandurah, Busselton, Margaret River, and Yallingup, are all proving to be huge draw cards, whilst other coastal and rural towns are showing renewed interest.
Places such as York, Toodyay, Lancelin, Gingin and Jurien Bay have also seen a large influx of Baby Boomers.
The trend is that the “Baby Boomer” market is now reaching a stage in their life where they are seeking a “Sea Change”. Most have the financial resources, being a substantial equity in their home and a good secure income, to be able to afford these second homes.
These homes range from rambling beach shacks to swanky apartments with club med type facilities, to small acreages and hobby farms.
Interestingly there are a certain number of investors from rural and regional cities who are also purchasing city apartments not only as investments but as a city base to operate from while coming to the city for business or pleasure. These properties are generally centrally located and have a good number of facilities to utilise whilst in Perth.
In light of the lifestyle investments, we have seen these areas enjoy excellent capital growth and indeed will continue to do so as the push for these investment continues. These holiday homes/hobby farms are not just becoming places to enjoy great capital growth and holidays.
They are also becoming the situation that many buyers are now holidaying in their retirement home during peak period before they retire and have the use of it whilst working and offsetting some of the costs by renting the property out for the rest of the year until retirement.
Notably, a new wave of regional investors/purchasers has been nicknamed VESPAS by leading demographer Bernard Salt – Virus Escapes Seeking Provincial Australia.
Bernard has identified an influx of families and couples that are purchasing in regional centres to escape the pandemic and to enrich their lifestyles at a far lower price tag compared to the capital cities.
Tax concerns
There are several different tax areas involved with holiday domes and investors should see the appropriate legal tax advice to ensure they are claiming the correct tax deductions.
It has been my experience that many investors are out of kilter with the actual deductions; some don’t claim any deductions, while the rest try to claim everything. Be careful that you move forward in the correct manner with the right advice from your accountant as it is only a matter of time until the tax man moves to audit holiday investment home deductions.
As the property market continues to grow and as the Baby Boomers continue to age, this trend can only continue and bring greater growth those these favoured destinations in Western Australia.
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