Knowing when to stay in your home - and when to go | Kanebridge News
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Knowing when to stay in your home – and when to go

If living your best life is on your 2023 to-do list, it might be time to consider a change of address

By Jeremy Stevens
Wed, Jan 4, 2023 9:37amGrey Clock 4 min

You’ve been successfully climbing the property ladder, leapfrogging towards the prized dream home. But lifestyle or family circumstances can change and a volatile market can make choosing between renovating or moving unclear. Do you take the renovation plunge? Or just avoid potential pitfalls and for peace of mind – and your hip pocket – simply seek that ready-to-go turnkey dream house instead?  

Carl Wilson from Home Estate Agents has been a Sydney realtor for 35 years. He’s well acquainted with this dilemma. 

“They’re at a crossroads,” he says. “Houses are around but they’re price prohibitive. Any reasonable free-standing house in Sydney’s east is $3m upwards – even semis are attracting $2.5-3m.” 

Despite a recent downturn, he says there has been price growth everywhere from Brisbane and Melbourne to Sydney. 

“There was a completely rundown Coogee semi that sold in 2020 for $3.75m, now on the market after reno for $5.5m – but then, they’ve spent $2m on it.” 

So, is the ‘renovate or move up’ conundrum more about growing family needs or profit potential? Wilson agrees that families requiring more space is often the overriding motivation. 

COVID, living and material cost rises have shifted peoples’ expectations even more. 

“All of those are a determining factor and they are deterrents to renovating,” he says. “Plus, there’s the DA process, compliance, build-time blowouts, unforeseen added cost – it’s two years of pain.”

It might seen reasonable for investors, Wilson says, but it’s not so much fun if you’re living in your family home as it’s renovated. 

“It can destroy marriages,” he says. “A turnkey might be $1million up on where they are but at least there’s certainty.”

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Building cost increases have also taken their toll. 

“Five years ago you could renovate a semi for $300,000 to $400,000 but it’s now $1million and potentially $2 million,” he says. “There’s also the issue of pricing by postcode. The overcharging of clients in affluent areas is a reality. 

“Alternatively, longtime city residents may sell out and buy up or down the coast. But now, NSW coastal houses worth $400,000 a decade ago can now be $1.5m. 

“Ready-to-go residences are becoming a necessity, but there’s never enough around.”   

To further muddy the waters, chances are it’s probably going to get worse. The pandemic has given people that didn’t previously have the money more capital, says Wilson. They accessed superaunnuation and halted spending on travel, new cars or entertainment. Plus, lockdowns and families all stuck at home together has given people pause.

 “When COVID hit, some moved out of units into houses to alleviate living pressures,” he says. “Now, they’re moving back into units but craving the extra space.”

Builder Gregg Jowett from iRenov8 has been in the industry for 33 years, building from the ground up, managing reality TV builds. He now focuses primarily on bespoke renovations mainly in Sydney’s east and inner west. 

“My typical clients are married parents of younger children, remortgaging because they’ve invested so much equity in their property,” he says. “My builds are a combination of creating more space, as well as purely aesthetic work. I do three to four jobs a year, typically six to eight months each. 

He says most of his clients are on their second property, renovating and staying put for a while. 

“There’s two types,” Wilson says. “One has renovated before and they tend to trust us completely. But to those new to renos, it’s never as streamlined as they think. They watch lifestyle TV shows and think they can do a lot themselves.” 

He says COVID  gave people pause to consider their options. 

“It’s about finding the right builder/architect combo,” he says. “Some people don’t spend money on decent architectural drawings, but they’ve still got to get through council and the ambiguity makes it hard for builders.”

Hector Abbott is a commercial property developer living in his third property since starting a family. He upgraded from a semi to a four-bedroom, freestanding home in Coogee eight years ago, a 1920s cottage that had been fully-renovated by an owner/builder. “He lived in it for a decade before we found it,” he says. “We needed more space to accommodate our teenage daughters. We searched for two years, coming across several houses that ticked boxes but not enough. When you have to donate a six-figure sum to stamp duty, it’s not a decision made lightly.”

The thought of renovating as opposed to buying a turnkey held no appeal at all.

“I work from home,” he says. “I need an office and being disrupted whilst in a renovation, or renting another property while overseeing a build, is too much to contemplate. 

“That said, four years ago we did an exterior renovation. We repainted the house, landscaped and rebuilt a pergola.”

The endgame for Abbott was always about a long-term abode. 

“I’ve no desire to own a $25m mansion,” he says. “The house is centrally located. The kids have grown up here and we have no desire to downsize. Investment return was never an issue, even though this area is bulletproof. Why on earth leave?”

 

Can’t decide whether to move or improve? Ask yourself these questions

Do you love where you live? If the kids are in school or there’s a great sense of community, staying where you are and renovating may offer a better lifestyle for everyone

What are house prices doing? If property prices in your area have risen significantly and you’re looking to downsize, or you’re after a seachange, you could sell up and unlock some of the equity in your property

Is your place unlivable? This means different things to different people – it may be too small, too old or too rundown. If you’re thinking of renovating, consider the rising costs of building materials and access to trades

Will selling and buying cost you more? ‘Dead money’ like stamp duty could be ploughed into a renovation. Check what costs you may be up for before making a final decision

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Mortgage holders should brace themselves for more pain as the Reserve Bank of Australia board prepares to meet tomorrow for the first time this year.

Most economists and the major banks are predicting a rise of 25 basis points will be announced, although the Commonwealth Bank suggests that the RBA may take the unusual step of a 40 basis point rise to bring the interest rate up to a more conventional 3.5 percent. This would allow the RBA to step back from further rate rises for the next few months as it assesses the impact of tightening monetary policy on the economy.

The decision by the RBA board to make consecutive rate rises since April last year is an attempt to wrestle inflation down to a more manageable 3 or 4 percent. The Australian Bureau of Statistics reports that the inflation rate rose to 7.8 percent over the December quarter, the highest it has been since 1990, reflected in higher prices for food, fuel and construction.

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“Many of the drivers of high prices are starting to be resolved. Shipping costs are now down almost 90 per cent from their October 2021 peak (as measured by the Baltic Dry Index), while crude oil prices have almost halved from March 2022. China is back open and international migration has started up again. 

“Even construction costs look like they are close to plateau. Importantly, US inflation has pulled back from its peak of 9.1 per cent in June to 6.5 per cent in December, with many of the drivers of inflation in this country similar to Australia.”

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