What is the ROI of a Holiday House?

A Behavioural Economic View

On paper, a holiday house looks simple: pay the mortgage, rent it out when you’re not there, sell one day at a profit. In reality, the “return” is a messy blend of money, time, health and emotion.
In the early years, scarcity bites. To service the loan, many owners rent the property out most of the year. The house functions more as a financial asset than a family retreat. Utility is abstract: you trade today’s beach trips for tomorrow’s balance sheet.
As the mortgage shrinks, the equation changes. Children are older, school and sport calendars fill, and time poverty rises. You may enjoy an intense 5–10 year “golden window” where family holidays, Christmases and long summers at the beach feel like the payoff you imagined. Then running repairs, upgrades and renovation plans reintroduce financial and cognitive load.
Retirement adds another twist. You now have time, but health, energy and risk tolerance change. The drive feels longer, stairs tougher, the second set of rates and maintenance more salient. Adult children and grandkids often face their own time scarcity and rising travel costs, so their usage is patchy. Neighbours begin to sell, crystalising an anchor price that finally makes exit feel acceptable.
Classical economics would tell this story through prices and yields. Behavioural economics adds the hidden ledger:
Scarcity & time poverty shape when the house can actually be used.
Sunk cost fallacy keeps families “needing” to justify past spending with future memories.
Present bias & projection bias tug between cashing out now versus imagining a future self living endless summers.
Risk aversion and loss aversion delay selling (“what if it goes up more?” / “what if I regret losing the place?”).
Attachment and identity bind family history, status and self-story into bricks and mortar.
Hyperbolic discounting erodes emotional ROI as visits thin out and enjoyment decays faster than we expect.
The true ROI of a holiday house isn’t nights stayed or capital gains alone; it’s how well those memories and milestones line up with the actual constraints of your life cycle.
My view: if you modelled this honestly, many families would be better off renting memories on demand and investing the difference—but our brains are strongly wired to overvalue tangible symbols of “future us,” especially when they smell like sunscreen and saltwater.

ThinKynd