Are holiday homes in snow regions worth the investment?

Investors in Australia’s leading snow regions tend to make their spending decisions on the basis of their own lifestyle preferences, rather than purely on rental returns and the prospect of long-term capital growth.

Many choose to use their properties for skiing when they please, and then lease them out on short-term platforms such as Airbnb or Stayz.

“Those platforms tend to be quite lucrative with high rents achieved per night,” says Shannon Fergusson from McGrath Cooma in NSW.

“Others might keep them as holiday homes all year round, but there are also growing rents because property is in such short supply and there’s demand for homes from visitors and also workers in the areas.”

In the NSW Snowy Mountains region, one of the biggest drivers of economic growth is Snowy 2.0, the $4.5 billion renewable energy project that is creating about 4000 jobs in the region and generating even more demand for homes.

“That gives even stronger rental demand longevity,” Fergusson says.

“We know they’re behind, so it’s probably becoming closer to an eight to 10-year project, and now they’re also talking about Snowy 3.0.”

The latest Domain rental data shows the median weekly rent in the Snowy Monaro region is $468 a week, up 14 per cent in the past year alone, with a 61.2 per cent rise in the past five years. The yield is now at 6 per cent.

In the Victorian Alpine area, the median rent is now $455, up 3.4 per cent on the year, and 59.6 per cent over the past five. The yield is 5.2 per cent.

“Investing in the snow regions isn’t the best-returning investment financially,” says Rob Ford of Zirky Real Estate in the Victorian Alps and the Alpine Shire.

“If you’re in Mount Hotham, for instance, by the time you’ve paid the leasehold charges and the booking agent’s commission and for cleaning …

“But most people buy because they want to ski and it can cost up to $10,000 a week to rent a property, so they might as well buy and put it in the rental pool to cover some of the costs for the rest of the time.

“Most of our buyers are 50 to 60-plus, successful people who want to hand them down through the generations.”

There is, in addition, a lot more demand for green holidays in the summer now, when people are looking for fresh air, bushwalks and mountain biking, he says.

But with overseas holidays now back on the cards, people are choosing to spend more time, and money, at the snow overseas instead, says Darren Venter, director of The Investors Agency.

“People have been making lifestyle choices and going for more luxury living,” Venter says.

“We saw that trend growing before the pandemic, but it really took off after the start of COVID.

“But with the borders re-opening now, and people able to choose skiing holidays at overseas holiday resorts in places like New Zealand, Europe and Japan, it’s going to be a balancing act to see how much time they want to spend in the snow here. Typical investors in these areas won’t be affected because these homes are generally luxury purchases from deep pockets, but those relying on property incomes can likely expect things to take a turn.”