Should I Renovate My Existing Home or Sell & Buy

Have you seen the TV show Love It Or List It. The show is hosted by Neal Whittaker and Andrew Winter. The brief is to understand what the owners feel is missing from their current home to suit their needs. Neale as the designer goes about re-creating their existing home to their brief and convince them to stay. Andrew, the agent expert, is tasked with going out and finding a new home so they sell and move. It is situation every real estate agent will come across weekly as clients seek to understand what value they have and proceed with working out the sums of what makes the most sense. Stay and renovate or sell and buy.

Of course the answer to this question will be different for everyone. For example, if you love your location & neighbourhood, there is probably a tendency to want to stay and make it work.

One of the factors that is always at play for staying and renovating are the change over costs of buying & selling, with a huge stamp duty bill effectively a tax for no tangible return. Over the last 2 years when you combine this with a historically low supply of homes available for purchase, the intense competition of other buyers fighting for a home and the rapid monthly price growth, it has felt like a mountain to climb that many people didn’t want to face or eventually gave up on.

But the tide has turned. The market will start to level out, and regionals market are likely to see prices decline in the 2nd half of the year. More homes will be available for sale at any one time, and the change over balance will be more even. The uncertainty now lies in the construction side. An article in the Australian Financial Review (25/3/22) recently stated that renovators are being told to brace for a 2 year wait and 20% cost blow outs. New South Wales has already recorded construction costs to have increased by 8.8% in the last 12 months according to Core Logic.

In the AFR article, one builder said he was paying $2.20 per linear metre for timber last year and is now paying over $8. Marty Sadlier from MCG Quantity Surveyors said there has been a four-fold increase in steel prices and copper wiring for electrical works have risen by about 74% so far this year. With other supplies rising sharply, along with transport cost increases, the wait time for labour is also growing.

Government grants brought in during Covid encouraged more renovations, and the re-building impact from flood damage is adding to the backlog.

With several construction companies facing difficult financial times, it is more likely that your building contract will now be on cost-plus basis instead of fixed contracts, which adds to the uncertainty of the final cost that you will face.

If the renovate or sell question is on your mind, send me a message or give me a call, and we can work through your options to find the best path for you.