Is now the right time to renovate your home?
Research conducted by property valuers and advisors Herron Todd White suggests the downtime people have experienced during isolation has spurned a home improvement boom with owners looking to improve their assets through maintenance and upgrade. Maintenance could be something as minor as a paint job or landscaping.
Some are even building granny flats.
“Granny flat builds continue to be a popular option, either for extended families or for those looking to obtain some additional rental income,” Todd Herron White said.
Some, may have undertaken the work themselves, while others have sought out professionals to help. There are certainly willing trades and suppliers hoping to quote on your job, especially in this climate with tradies now looking to where their next job might come from.
The reasons to renovate
There are generally three reasons to renovate or undertake a home improvement. Design your dream home. Add more value. Attract buyers, including investors.
Designing your dream home speaks for itself. You want to live in a house that looks great and suits your needs, which more often than not isn’t 100 per cent the house you bought. For most home buyers, compromise on price, function or aesthetic usually has to be made to break into the market. However, most will buy a house, knowing what changes they want to make. And now is the perfect time to make them.
The more functional and aesthetically pleasing your home is, the higher the value. realestate.com.au says a well-planned renovation can add up to 10% to the value of your home. This is particularly true if you have owned the property for over five years. Of course, the location and size of your house will also influence property value.
Finally, if you are looking to sell, adding value is a no brainer as long as you don’t overcapitalise, meaning don’t improve a property beyond its resale value: i.e., you can’t recoup the money you spent when you sell. For example, don’t spend $100,000, if you are only going to make an extra $50,000.
You will also need to understand current market values. It goes to the point above regarding overcapitalising: you need to know what your property is worth and what its value is in the broader market before you commit to a renovation. This will also help you set your median price.
You can establish median prices for particular areas by reverse engineering the InfoChoice Where Can I Buy calculator.
The last thing to do to attract buyers or investors is examine the buyer demographic for that area and determine what has attracted them. Don’t let your personal tastes dictate how you renovate, if you are renovating to sell.
Take advantage of macro circumstances
The construction sector is slowing. It’s why the Morrison government is handing out $25,000 grants to the home construction industry. If you are renovating, the Federal government HomeBuilder scheme will be restricted to substantial renovations and the construction of new homes, with recipients required to spend at least $150,000 before being eligible. It’s a hefty sum, but if you are undertaking large renovations, make the most of it.
You should also make the most of low-interest rates and lack of supply. By putting a decent looking home on the market, you are more likely to attract buyers. Low interest rates can also help you personally, as borrowing money has never been cheaper. If you are looking for a personal loan, you can compare them here.
Instead of delaying your plans to build a new home or renovate later on, now’s prime time to take advantage of low borrowing costs by kick starting the design and planning part of the project.
Finally, a post-pandemic rush is expected and it would be best not to be caught in it.
If the HomeBuilder scheme works, tradies will be busy and there could be a long queue to get your renovations done. Council approval will also take longer with more permits to process.
The best thing you can is submit your plans early, figure out your budget using InfoChoice’s Budget Planner and start your work now.
This update is not financial advice. This article is general news and information.
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