WHY THE RENOVATOR’S DELIGHT HAS DONE ITS DASH

 Australia’s love affair with the renovator’s delight could be on the rocks as skyrocketing building costs and the country’s biggest tradie shortage in decades take hold.

Just 12 months ago comparison site Finder conducted a homebuyer survey which revealed four in five purchasers wanted to buy to renovate as housing supply was low and property prices were soaring. But what a difference a year makes.

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Today, building materials are scarce and the most acute shortage of building professionals is for bricklayers, carpenters and roofers. In March, Jobs board Seek tracked the highest number of job advertisements in its 25-year history with the Trades and Services industry driving most of the available jobs. The shortfall may be a result of the Federal Government’s HomeBuilder scheme, which injected more than 130,000 new builds or large renovations into the market, coupled with a drought of foreign skilled workers brought on by two years of closed borders.

So unless buyers have a trade under their own tool belt or a personal pipeline to products then renovating needs to be a long term goal with an elastic budget.

As a result, daggy and dated homes are proving less popular. But for patient purchasers who are happy to put renovations on ice, this changed climate is translating to more bargaining power.

“Good things do come to those who wait and this is probably the most favourable buyer’s market I’ve been in for a few years,” said Sydney-based buyer’s agent Michelle May. “But a lot of buyers are unable to see potential in older homes. “With our clients we sometimes have to convince them to have a look at these places because often they’re not actually that bad.” 

She says many buyers have become accustomed to seeing properties online that look amazing.

“They’re styled to within an inch of their lives, there are gorgeous people with their dogs in the images and you can almost smell the Aesop candles. It’s like you’re flicking through an interiors magazine.”

May explained that anything on the market which hasn’t been styled, is perhaps a deceased estate with a decades-old kitchen or bathroom is being overlooked by many buyers.

“I say to my clients ‘If this had been styled by professionals you’d have wanted to look, whereas you’re quickly dismissing it.’ But maybe it’s actually in a great location and the bones are really good. As long as you’re willing to put up with it for a couple of years and ride out this market recalibration, you could actually do really well.”

Home stager and interior designer Kyara Coakes, founder of The Property Stylist, says selling agents are telling her listings in need of significant work are not attracting much attention, opening the window for savvy buyers looking to negotiate.

“Agents are coming to me because they’re finding almost no one’s even looking at them,” Coakes says. “Some of the agents are saying they’re only getting one or two people per inspection but fully renovated or styled properties are still selling within two weeks, even in a quieter market. It’s like demand has just completely changed.

“For the past 10 years – well before COVID – people were definitely wanting to put their own stamp on a property, but that’s definitely not the case anymore.”

Unsurprisingly, May says the popularity of reality TV shows such as The Block, House Rules and Selling Houses Australia have all contributed to the demand for renovator’s delights over the past decade. Before the construction crisis, she said many renovators who didn’t do their homework found themselves buying a money pit. Now, however, she warns the gamble could be even greater.

“You always get first-home buyers, or inexperienced buyers, who overestimate their own DIY skills and underestimate the cost of trades – even prior to COVID and the import crisis,” May says. “I feel it’s our job to take the rose-tinted glasses off for those clients. 

“We’ve renovated and flipped so many properties and it’s not as easy as it looks on The Block.”

Building woes have even hammered the successful reality show with producers of The Block 2022 struggling to land enough tradespeople and making a last-minute call out via the media to source skilled workers to finish the contestants’ houses.

“People who’ve never renovated before, or have no idea what they’re up against in the first place, don’t really get what this crisis means,” she says. “But people who are in the know, they’re definitely holding off and you see it in the auction results on Saturdays.” 

She says when the market was hot, she was bidding against small-to-medium builders who had the economies of scale and the know-how to renovate well. 

“There’s not the profit for them now so they’re dropping off,” May says. “On the other hand, properties with everything done are still going gangbusters and are exceeding expectations. It’s clear renovator’s delights have come off the boil.”

Ultimately, while there are opportunities out there for buyers who are willing to wait, May said research and due diligence is still key. She stressed the old real estate adage of buying “the worst house in the best street” might be great in theory, but not always in practice if the downsides of the home are beyond renovating.

“There’s sometimes a good reason why it’s the worst house on the best street,” she suggests. “It could be a very skinny terrace, or the bathroom is way in the back of the house which could be extremely costly to move, or the street behind it has a huge apartment building so you have no privacy. 

“Just be mindful that renovating is definitely not for the faint-hearted and in some cases, it should be kept on TV.”