Australians love to prime, paint and pimp their homes into shape. Our annual renovation spend, of about $32 billion each year (based on the July 2017 edition of the Housing Industry Association’s Renovations Roundup report), is testimony to our enthusiasm for home improvements. The question is: are all those renovations really improving the value of our homes?
Most popular renovations
The latest Houzz survey pinpoints the most popular renovations among Australian home owners. Kitchens top the list, accounting for almost one in four (23%) renovations. That’s closely followed by living rooms (20%), bathrooms (17%), and surprisingly, laundries (17%).
However, the pandemic is also driving demand for a home office – a project being tackled by about one in 10 Aussie home owners.
How much can you expect to pay?
The final cost of a renovation depends on a variety of factors. It’s a no-brainer that a kitchen makeover is likely to set you back a lot more than freshening up a bedroom. But your renovation budget will also be shaped by the scale of your project, the materials you have in mind, and whether you plan to use tradesmen or roll up your sleeves and take a DIY approach.
The common thread is that plenty of home renovations don’t come cheap. The latest Archicentre Cost Guide shows a kitchen makeover can cost from $15,000 to $43,000. A new bathroom can cost up to $27,000, and even the humble laundry can soak up a renovation budget of $17,000.
If you’re thinking of landscaping the yard to turn your outdoor space into a green haven, the costs can be lower, though still not cheap.
Removing a tree can cost up to $2,000. Concreting the driveway could set you back $95 per square metre. Hiring a professional landscaper can cost around $55 per hour, with a full garden makeover potentially setting you back around $4,000.
Will the renovations add value?
If you have home improvements in mind, it always pays to avoid the trap of overcapitalising. That’s when the cost of the renovations outweighs the value they add to your home. There’s not much point spending $40,000 on a flash new kitchen if it’s only going to add $20,000 to your property’s market value.
To avoid this pitfall, property experts suggest a general rule of thumb is to spend no more than 5% of your home’s value on renovations. Therefore, if your place is worth $600,000, a kitchen budget of $30,000 may be reasonable. If the makeover includes eco-friendly appliances, a kitchen renovation can have the added appeal of saving on power bills.
Sometimes, it can be a relatively simple matter of seeing your home through fresh eyes. Finder research shows that lack of natural light is a turn-off for 46% of home buyers. Installing a sky light could make a difference to your home’s market appeal, while also cutting energy costs.
When it comes to outdoor areas, landscaping can boost your home’s value by up to 15%. But be warned, high maintenance features like a swimming pool won’t appeal to everyone.
The upshot is that it’s all about knowing what works for your particular home and location. If in doubt, talk to a couple of local real estate agents for an idea of whether your planned project will deliver a decent uptick in your home’s value.
It’s not always about value-add
Renovations aren’t always about adding a luxury touch. As it becomes harder to find an affordable first home, a growing number of first home buyers are planning to buy budget-friendly properties in need of some TLC that they can fix up later.
Finder’s First Home Buyers Report 20219 found some first home buyers believe their best chance of getting on to the property ladder is by purchasing a ‘fixer-upper’. It’s a strategy that’s seeing 79% of first home owners plan to renovate their new place.
Paying for home improvements
Your ideal renovation project can take time – and careful planning. And along with choosing colours, fixtures and fittings, it’s worth thinking about how you’ll pay for it all.
A mortgage broker can suggest a range of options from refinancing your home loan to using a personal loan – both of which can preserve valuable cash savings. That can be a must-do in case the budget blows out or an emergency expense crops up.