How much is too much?

Is the humble Kiwi holiday home in danger of becoming a financial victim of the investment market and speculative buyer? It appears that gone are the days when you just through up a tin shed on your new section and made do. The Kiwi Bach has become a significant asset in anyone’s terms and is well on the way to being treated as more of a strategic purchase by those with the money to buy premium sites.

Sunday’s New Zealand Herald featured a $NZD 2.2 Million Bach for sale on Waiheke Island’s Onetangi beach. For this you get a small two bedroom house on a 835 sqm section.
Now that’s a serious level of investment for a new buyer even in today’s property market, especially when considering a future ROI. However if you look at the figures with the original purchase price of $1200.00 and a 45 year term, that’s a sound interest rate.(see linked article for details)
http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10475247
So is this a sustainable model for the next 45 years or have we reached a price ceiling based on New Zealand earnings and salaries? It certainly appears that there is a different pricing bracket for those properties that are considered an exceptional New Zealand location. Remember by international standards we are still a cheap buy, especially when you consider prices in Europe and America not to mention the currency exchange rate. Better save your pennies.