The house is getting too small but you love the area…what are your choices? You can either sell the property and buy a new one, do some renovations to add some more living space or knock the whole place down and build a completely new property on the existing site.
It’s a very individual choice and much will depend on the circumstances. If you choose to move, you will be faced with all those associated costs such as stamp duty, solicitors fees and moving expenses. According to Angus Kell, state manager NSW and ACT of Archicentre, the average cost of relocation in Sydney is $50,000 to $80,000 although if you are at the top of the market, that figure will be much greater.
So if you think that that money would be better spent on something tangible like an extra room rather than an intangible like stamp duty or fees, maybe renovation is the answer. And how much that will cost depends on what you do, where you live and the site itself.
Kell says renovation can be a difficult concept for people as “you are committing to something you can’t see”. What he means is that if you simply buy a property it is there in front of you; but if you are putting your money behind a set of plans, you may not be able to totally appreciate what you are getting.
The cost of renovating
Archicentre’s cost guide estimates that an 80 square metre ground level addition to an existing building would cost between $164,526 and $310,896. It’s not just the extension you have to pay for but costs like rewiring and reroofing.
Harley Dale, chief economist at the Housing Industry Association, says that on average a ground floor extension is worth in excess of $120,000 in terms of the actual structural addition to the property. It is not uncommon, however, for major structural extension work to be worth $300,000 to $400,000.
Upper level extensions tend to be more expensive than ground floor.
If the amount of work you are contemplating involves more than 50 per cent of the house then Kell suggests you might consider doing a knockdown and rebuild.
Choosing this route means that you can either consider a project home or an architect-designed property.
Alan Soutar, executive general manager of contract building at AV Jennings cites three key benefits from a knockdown rebuild.
“It allows you to live in a new home without changing your address. You can choose a design and floor plan that reflects your lifestyle and budget, and you get exactly what you want without compromising on size, features or details,” says Soutar.
The average cost of a new home, according to BIS Shrapnel stood at $247,900 in March 2010 although the figure is distorted as the First Home Owner’s Grant boost scheme meant that many of the properties included in the data were first homes which generally are at the lower end of the market.
There are two schools of thought as to whether a knockdown rebuild (KDR) is sustainable. “If you are serious about sustainability then you would not do a knockdown rebuild but would improve the performance of the existing building,” says Kell.
But Masterton Homes makes the point that, when they do a rebuild, most of their new homes save up to 40 per cent in water usage and reduce green house emissions by up to 25%.
One issue in a KDR situation will always be where you live. If you are in an inner-city area, then you might find your local council less willing to allow you to knock down a federation property to replace it with a modern home.
Whatever decision you make, it’s important that you don’t overcapitalise. The golden rule is that it is better to have the worst house in the best street than the best in the worst. Always ask a local real estate to give you a current valuation and then a gauge of what your property would be worth afterwards. At least that way you should be able to have a realistic view on how much it is worth spending or whether you are better selling and buying anew.