March 18, 2016
More than one third of Australian homeowners will look to renovate their current abode within the next 12 months, new data has revealed.
According to Mortgage Choice's 2016 Money Survey, 36.2% of homeowners said renovations were high on their agenda.
Speaking about the results, Mortgage Choice chief executive officer John Flavell said he wasn't surprised to see such a significant percentage of homeowners looking to renovate their property over the coming year.
“Not only can renovating a home significantly improve its value, but it also allows homeowners to stay at their current address,” he said.
“Furthermore, with property prices continuing to rise across most capital cities year on year, many homeowners may believe it is cheaper to renovate their home rather than buy and move elsewhere.”
Research conducted by RP Data CoreLogic found property prices across the combined capital cities grew 0.5% in February, taking values 7.6% higher over the last 12 months. This strong growth follows an 8.3% jump in property prices the year before.
“This data would not only suggest that the Australian property market remains robust, but price growth is unlikely to stagnate anytime soon,” Mr Flavell said.
“With that said, it is not surprising to see more than one third of Australian homeowners are looking to renovate their home within the next 12 months.
“Of those who are looking to renovate, 57.0% said they would look to renovate their kitchen or bathroom first. While renovating a kitchen or bathroom can add significant value to a property once complete, it is important to note that renovating these rooms can also be costly and render a home unliveable for a period of time.”
For those who are thinking of renovating their property, Mortgage Choice offers the following tips.
TIP 1: Set a budget
While it can be difficult to stick to a budget during the renovation process, it is still important to set one. If you are hiring a professional to complete the renovations, make sure you source several quotes from different providers as this will give you a clear idea of how much you could be up for. If you are completing the renovations yourself, make sure you do your research and know exactly what is involved before getting started. It is also important to ask yourself: ‘will I be able to stay in my home for the duration of the renovations, or will I need to move out for a period of time?' How you answer these questions will have a significant impact on your budget.
TIP 2: Plan for the unexpected
Even if you are hiring a professional who is happy to be locked into a fixed price for their services, it is inevitable that costs you don't plan for will arise. It might be that your paint choice turns out to be a mistake or some of the building materials are ruined because they are left outside. Whatever happens, it is important to plan for unexpected costs by factoring a financial buffer into your budget.
TIP 3: Work out your financing
Once you have sorted out your budget, you will need to work out how you plan to finance your renovations. Will you use the cash you have in your offset account? Will you redraw funds from your home loan? Will you need to refinance your home loan? A mortgage broker can help you work out the best way to fund your renovations.
TIP 4: Ask for help
No-one likes to take advantage of their friends and family, but it is always a good idea to ask for help where possible. Whether you know someone who can source a product discount, or someone who can help with demolition, asking for help from friends and family can reduce the time and money you need to invest in the renovations.
TIP 5: Take a deep breath
Renovating your home can be a stressful experience, so it is important to know what you are getting yourself in for before you start the process. Do you research, speak to friends and family who have gone through the process, and take a deep breath if time frames and/or costs blow out.