Is the Kiwi dream changing?
Historically, as the wealth of New Zealand families increased, their desire for a bach or crib also increased. Owning one became a status symbol and signified that you had ‘made it’ on the financial ladder. As time progressed, a bach or crib evolved from something simple and low cost that was often built by the owner beside a beach, river or lake, to now being a more palatial dwelling often akin to the family home. These are clustered in areas of high popularity but are now often many streets back from the water or river front, and are located in a new form of suburbia. These dwellings are built by professional builders and are often funded with a mortgage (debt-funded).
A stronger NZ dollar, a desire to reduce personal debt levels, an increase in volatility in holiday home capital values, the changing family structure, personal time restrictions and the impact of the internet have all combined to cause many New Zealand families to reassess why they own a bach or crib and what they should do moving forward.
We are spending increasing amounts of time working with clients to resolve this financial, family and lifestyle issue. For many, the decision is significant as the bach or crib has been pivotal in the evolution of their family, but it also now represents a significant financial and time investment that may not be providing the rewards it once used to.
Lower international airfares and a desire for greater flexibility is leading to more New Zealanders than ever before investing into regular overseas travel rather than having many hundreds of thousands of dollars tied up in a holiday home. Travel can be funded from surplus cashflow whereas purchasing a holiday home is usually debt funded.
Talk to your Milestone Direct adviser. We will help you take the emotion out of any decision you are making regarding these dwellings and provide much needed balance and guidance as to what may be best for you and the family.