Newsletter Articles

Home Upgrade – to buy, build or renovate?

As house prices continue to climb and land proves harder to find, today’s property market is becoming increasingly confusing. Deciding whether to buy, build, renovate or detonate needs careful consideration. It is hard to know which way to turn in a market that is constantly on the move.

Prospective homeowners, in the current climate, are spoilt for choice however these decisions can appear daunting and where markets are moving, it’s not always a cut and dry outcome. Over the past decade a popular trend has been to buy rundown properties, renovate and sell to pocket the profits. One of the major advantages of renovating an established home is that you already know the price performance of the property over time. Yet there are issues with over-capitalisation where the cost of the renovation outweighs the market value it will add to a home, also rising house prices and lack of time have turned a rising number of people off the renovators route.

The trend has turned towards home construction; areas previously dominated by renovation are witnessing more home creations. The renovator’s route has been tainted as homeowners put in more hours at work, and trades people prove harder to find. Due to the cost of extending property, on a dollar per square metre basis, new construction has proved several hundred dollars cheaper then renovation.

The best bet for home owners wanting to build their dream home in inner city areas, is to purchase an older property and ‘detonate’ to make room for a new home. However, if you’re thinking post war, be prepared to pay big dollars. You will be competing against plenty of deep pocketing buyers, who can afford to take their time planning their dream homes.

If you already own your home and renovation isn’t a path you want to head down, don’t rule out the knockdown and rebuild option. Besides remaining in the same location, other advantages of this approach include avoiding having to look for suitable land or paying stamp duty. On the down side, you will have to move into another property and pay rent for the duration of the project.

For those potential home owners looking for new homes under the $500,000 price range, you probably need to look beyond the inner city, where developers are building residential projects offering house and land packages.

In a market where prospective homeowners are paralysed with the number or choices, there is no right path to head down. Home owners should make their decision based on their preferences and individual circumstances rather than relying solely on a market which is on the move.