If you love where you live and get along well with your neighbours, renovating can be a tempting alternative to the upheaval and costs associated with selling up and buying elsewhere. But it’s worth knowing how much to spend and what you can do to improve your home’s liveability and resale value before committing.
“I love watching clients transform properties and express their creativity, but also reap the rewards of selling at a gain,” says LJ Hooker Avnu founding agent Adrian Bridges. “When a client invites us to share our thoughts on a property’s potential and then work with them from day one, it’s one of my favourite parts of the job.”
Bridges has been renovating his own properties since the age of 17, giving him useful insight when it comes to advising clients on their home’s potential. “The difference in seeing renovations done as an outsider to getting in and doing it myself was a real shock to the system,” he admits.
“Learning about things that can go wrong, blowing budgets, the builder-owner relationship, dealing with difficulties … it’s given me invaluable experience when it comes to walking clients through the process, finding the right buyer for a property that needs renovations, or being able to convey the value behind even just a DA approval.”
His first-hand knowledge also gives him an appreciation of the effort that has gone into a renovation and why a turnkey property is justified in selling for a premium price.
Do your sums
To avoid overcapitalising, LJ Hooker Avnu agent Brad Rogan advises having an appraisal done by a bank or trusted real estate agent first. It’s then easier to work out the maximum you should spend. “A good agent will also be able to advise whether your renovation plans are likely to add value to your house at sale time and how much,” Rogan says. “Spending $300,000 on a renovation may make a big difference to how your home looks and feels, but if it only adds $100,000 to your property’s value, it might be time to scale back your plans.”
It’s wise to focus as much on resale value as you do improvements designed to enhance your own enjoyment of the home, no matter how long you plan to live there. “Even if you’re not planning to sell anytime soon, life has a habit of throwing curve balls at us that could lead you to sell your home earlier than you think,” Rogan says.
Your agent can also tell you how much similar renovated and unrenovated properties in your area have been selling for. “Comparing apples with apples is the best way to make calculated decisions on your own home renovation plans,” Rogan says.
Bridges agrees. “You need to look at what else has sold in an area to know what people are prepared to pay and it comes down to building a home that’s right for that area.”
If your neighbourhood is popular with young families, for example, keeping this market in mind during the design phase of a renovation is vital. Parents of young children appreciate having level access to lawn, being able to see the pool from the kitchen and living areas, and having the master bedroom and children’s bedrooms on the same level. In areas more popular with parents and teenagers, Bridges says a layout that allows for space and privacy becomes more important. If you’re designing for a downsizer market, a low-maintenance home on one level or with a lift will be in demand at sale time.
If you’re designing for a market with needs that differ from your own, consider at least putting in provisions for such things as a pool or lift, Bridges says. Landscape design can allow for a pool to be dropped in later, should a buyer desire to do so, for example. Likewise, large cupboards on each level could serve as storage space for you, but allow a future buyer to install a lift in their place if needed. If you live in an area popular with families but your own children have left the nest, you could use the extra bedrooms for luxury additions such as a home gym, dressing room or separate home office.
“It almost becomes failsafe if you design something that already has a built-in market. It’s knowing which market you’re designing for and keeping that vision the whole way through,” Bridges says. “Because we are speaking to buyers every day, we know what their needs are, we can see changing trends to ensure what you’re creating suits the market, and we have valuable insight as to what people want.”
Tastes vary widely and interior design trends change, but there are some timeless fundamentals that appeal to just about everyone and it’s these that can take a renovation from good to great – and give your home’s resale value a boost in the process.
An open-plan kitchen/living/dining area is one such fundamental, as is good indoor-outdoor connection; well-located, spacious bedrooms; a layout that flows; and an abundance of natural light.
Having at least one bath is advisable, preferably in the family bathroom, but don’t get too hung up on decorating trends. “Tastes change and vary so much in kitchens and bathrooms that to try to pick a trend even two years from now, let alone 10 years from now, is virtually impossible,” Bridges says. “We’ve seen people spend over $100,000 on a kitchen for resale then two weeks after settlement it’s out on the sidewalk because the new owners have gone for a different look.”
“Soft finishes can be changed quite easily but if the layout doesn’t work in a home and it can’t be changed easily, it might be difficult to sell down the track.”
When it comes to giving your resale value a lift, Rogan advises against spending up big on rooms such as laundries or spare bedrooms. As a guide, if you’re just making cosmetic improvements within your existing house (sanding wooden floors, replacing the kitchen, repainting) he suggests spending no more than 10% of your home’s value on renovations. “If your renovation requires structural work, such as an extension and reworking of the internal layout, try to spend no more than 40% of your home’s value,” Rogan says.
Spending no more than 2% of your home’s value on a new bathroom or kitchen is also a good rule of thumb, he says.
If your existing home is an older-style house in original condition and you plan to renovate more than 50% of it, the whole house will have to comply with current building regulations. New wiring, insulation or plumbing may be necessary to meet them, which can significantly add to your costs.
Getting clear on these costs upfront can help you decide whether it’s worth renovating, or if you’re better off selling up and moving to a house that better suits your needs. Be sure to also factor in selling costs such as agency fees and marketing costs, moving expenses and stamp duty on your next property.
If you love where you live or enjoy the process of renovating, be sure to factor in the costs of having to move out while the work is carried out, if that will be necessary. Owner-building is an option for the DIY minded, or consider having a builder finish a renovation to lock-up stage, leaving you with the painting and interior fit-out. This can reduce your renovation costs substantially.
According to the Archicentre Australia Cost Guide, extensions to an existing home cost between $1900 and $3600 per square metre. Extra costs can come into play if stairs are required, the roof needs altering, or structural work to the existing building is needed.
Renovations inside an existing house cost anywhere from $700 to 3600 per square metre. Allow extra funds if there are hazardous materials such as asbestos involved.
A bathroom or ensuite renovation costs an average $12,000 to $27,000 in Australia, according to Archicentre. New kitchens cost an average of $15,000-$43,000, and laundries $6000-$17,000 (add extra for white goods).
Renovating can be rewarding, but deciding on a budget and sticking to it will make the process far less stressful.
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