Judging by the popularity of home improvement TV shows, it seems many of us are mad for a makeover. According to Building Approval figures reported by the Australian Bureau of Statistics, the value of residential building alterations and additions rose 2.3 per cent in September 2009, and has risen for the past nine months.
"It's always been a very steady rising market," says Ross Trewartha, Senior Project Manager of Building and Construction Research at BIS Shrapnel. Between 1989 and 2006, BIS Shrapnel conducted the Home Improvement Market in Australia survey, which explored the reasons that people added to their home. "[In the 2006 survey] the most important reason was due to the size of the family," explains Trewartha. "Of those people that did an addition, 28 per cent said it was less expensive than to move."
But before you call in the contractors, there are a few simple things worth considering – like the condition of the house – is there any dry rot, concrete cancer, or a termite problem? Do you love where you live – the block of land, the community, schools, amenities – or is there another area that would suit your needs better? And importantly, if you were to sell instead, is it a good time to do so?
According to the recent RP Data – Rismark Home Value Index, "Australia's housing recovery moved sideways in the month of September with national home values flat". However on a quarterly basis, "Australian home values rose by a healthy 2.5 per cent" for the September quarter.
atthew Bell, economist at Australian Property Monitors expects property prices to continue an overall rising trend into 2010, although at a more moderate pace. "Most Australian markets are still characterised by a significant undersupply of homes," explains Bell. "On the demand side, we've got very strong population growth and a strongly recovering economy fuelling income growth, and on the supply side, we've still got relatively weak construction of new dwellings, developers still struggling to get finance, and the usual bottlenecks in zoning, development and building approvals processes."
Whether you're a mover or an improver, there are important things to consider, and plenty of costs involved too.
Moving house
Consider:
- It's one of the more stressful life events a person can experience (Living in Australia Study, 2003)
- House-hunting on weekends. If you sell first, you could be under pressure to buy quickly.
Costs:
- Moving expenses
- Stamp Duty
- Advertising, Real estate agent commissions, legal fees
- Building and pest inspections
- Refinancing costs
- Styling or updating your home to achieve the price you're after.
Renovating
Consider:
- It can be a major disruption to your life, and you may even need to move out of the construction zone
- Time spent project-managing, overseeing contractors and hunting for fixtures
- Risk of over-capitalising, where the expense of the renovation outweighs the value it adds to the home.
Costs:
- Project timeframes and price can blowout
- Material and labour costs
- Design – architect / draftsman fees
- Council fees and permits
- Loan costs – if borrowing to renovate
- Rental payments if you have to move out.
It will help to research property types and their value in your local area, and ask a real estate agent to give you a price guide for your home – both before and after proposed renovations. And remember to factor in the cost of living elsewhere for a while if you're doing major renovation works, or if that bright-orange bathroom is the only one you've got.