Local holiday letting property market feels sting of Aussies’ travel bug

Surveys showing lots of people planning to go overseas this year, stay away more and and spend more. Will it hurt the holiday letting market?

Residz Team 3 min read

Are you sensing that staycations are soooo-pandemic, and overseas travel is on trend post-Covid? Our 25-year-old is overseas right now, the 19-year-old is planning her June trip, and our 21-year-old is saving to do the same later in the year. Surveys are backing what our household knows. There is going to be a mass exodus of young Aussies in 2022. This begs the question, will there be enough staycationers left to fill all those holiday homes bought to rent out on Airbnb or Stayz?

Aussies plan to spend more on travel

After two years of pent-up frustration at not being allowed to leave our shores, it seems Australians could be getting over the staycation. A recent Skyscanner survey of travellers found:

  • 60% of Australian respondents said they would spend more on overseas travel in 2022 compared with 2019
  • 30% would spend about the same as 2019
  • 7% would spend less
  • 3% didn’t know

Two-thirds of us will travel somewhere

This backs up a Commonwealth Bank survey in February which found 51% of respondents were saving to travel in 2022, around 15% higher than at the same time the year before. 70% said they planned to travel either internationally or domestically this year.

The survey found:

  • Young adults (18 – 29 years) are more likely to be planning to travel internationally in the next year (2 in 5), compared to Australians over fifty years old (1 in 5).
  • Men are more likely to be planning international (66 per cent) and domestic (34 per cent) travel than women (60 per cent domestic and 23 per cent international).

This is fascinating data, especially considering loads of graduates owe the ATO more than a $100,000 house deposit.

Home-buying intentions drop

While the bank’s GoalTracker app found general purchases and buying a home were higher priorities than travel, Household Spending Intentions research found “home buying” was down on the list of intents 27.3% from a year ago. As we said, the intention to spend on travel was up 14.9% on 2021 levels, although not quite at pre-Covid levels. Relative to January 2019 travel spending is down, especially for: travel agents, airlines, cruise ships, bus lines and airports.

Digital nomads want to spread wings

With many international borders open to vaccinated Australian travellers, it’s understandable young people want to go through the rite of passage captured by the umbrella term “backpacking.” But regional holiday home investors will sorely miss this restless group. Their homes have been booked solid by those who can work remotely while travelling domestically, and this consistent income has pushed up house prices to record levels. Is the staycation party over?

Visitors fill some of the gap, but not all

International arrivals aren’t yet replacing those who are flying out. According to the Australian Bureau of Statistics there were 580,000 overseas arrivals and 610,000 overseas departures in April 2022, the largest number of travellers since the start of the pandemic. Most are from the UK (27,000), followed by New Zealand (19,000) and India (15,000). Will these visitors spread out across our regions, filling the holiday homes and the bank accounts of investors?

Spare rooms filled with rellies as much as paying guests

More than a quarter (28%) will stay with relatives or friends, if they follow patterns from Statista data from financial year 2020. However 41% will stay in a rented apartment or house, which would incorporate Airbnb or Stayz type of accommodation. How many of these will be in regions popular with property investors like the Sunshine Coast and Toowoomba in Qld,  Bendigo in Victoria, Rockingham in WA, Central Coast in NSW, and Marion in South Australia, is anyone’s guess.

Collapse or shift to permanent rental?

Headlines like that of the UK-based The TelegraphWhy the holiday let property market is about to collapse” will give Australian property investors more pause. However, with rental vacancies in regional areas around 0-1% in some areas, there should be plenty of demand from tenants to keep homes filled for now. The ones who will feel the sting most will be those who can’t afford to lose the higher nightly rate of short-term lets lest they lose the luxury of having a holiday home.

Image: Kathryn Greenhill