Would you get $400 a week resdiential? At only a 50% difference for holiday let, I would go with the permanent. Usually the variation is much higher for a hoiday let. As management costs (if you are not doing it your self) are much higher. A lot to consider like linen? will you provide it? or bring their own? We have 2 sets for each bed and the cleaners change and launder the sheets, but many wont do that.

Our apartment ranges from $700 a week midwinter to $2500 Christmas/ New Year/ Easter. Permanent rentals in the block are around $250 a week.

We have a holiday rental in Victor Harbor SA. We manage it ourselves, advertise through Stayz and are very happy. Had it for 18 months, we get way above average for the area bookings. IE I already have half of July booked, and most people say no one goes to Victor in July. I turn away more bookings than I accept, as we are pretty fussy about who we let in.
 It is in the higher end of the market.

Lucky as we have family in the area who clean and maintain it. (at comerical rates)  we borrowed most of the purchase cost, and after depreciation it is cash flow positive around 10K. Plus we still get to go sometimes ourselves.Wish we had 10 of them.
Waydo, I dont know how you would find holiday vacancy rates? But yyou must do your sums on local knowlege and a dose of common sense. If it was only rented school holidays and Easter who would you feel about it then?
We bought our place just for ourselves,initially, but then the rental returns were too good to ignore.
So it is really just what you are comfortable with.