Renovating and the Shift Toward Nothing-To-Do Homes
It might be stating the obvious, but we are going through a period of significant change, with most Australians holding concerns about inflation and the potential impact of interest rate hikes on home prices, home affordability and living expenses.
The cost-of-living crisis is making home finances challenging to manage, but as inflation falls and interest rates stabilise, there is an expectation of increased market activity and optimism into 2024 and beyond.
Property experts predict that Newcastle could see more robust price growth in the coming months as rising home values in the capital cities make buying a home unaffordable for a growing number of buyers.
“Regional markets that are still relatively affordable and are located within good proximity to capital cities are seeing a resurgence, as they are becoming an attractive option for home buyers who cannot afford to buy in the capital cities,” said NAB head of valuations and property advisory Mark Browning.
“Even with less regional migration and higher interest rates, the appeal of a good climate and desirable lifestyle will still attract people seeking sea and tree-change experiences, affecting property prices in these areas.*”
For many, and with the continued upward pressure on the Newcastle housing market, investing in our homes and other properties remains the most reliable path to wealth creation and a comfortable retirement in Australia today.
Alongside that discussion is the question regarding the upside and downside of renovating – whether it be a home you are living in, a home you are planning to sell or an investment property you are hoping to improve the value on.
There’s no denying that Australia has a bit of an obsession with renovations, with popular TV shows such as The Block, Deadline Design and DNA of Design inspiring DIY enthusiasts for years. Renovating can be a very cost-effective way for homeowners to upgrade their homes (without having to move) and create equity, and it is very attractive to purchasers who want a home that feels new.
Rising construction costs mean that the more extensive the work that needs doing, the less appealing the home generally is for buyers – driving down the asking price. On the flipside, if the renovation is more cosmetic, the less the impact will be on the asking price. At the end of the day, the increased risks associated with completing a renovation have made fully renovated, ready-to-move-into homes more compelling to buyers who are prepared to pay a premium price for quality and thoughtfully renovated homes.
Newcastle property agents are indicating that older dwellings requiring renovation are no longer in high demand and cite the risks associated with overcapitalisation, rising construction costs, material supplies and trade shortages as the main reasons. These key factors for a renovation project make the buy cheap, sell high theory very difficult to achieve and the need to seriously question the feasibility of undergoing large renovation projects - for the foreseeable future anyway.
This has ensured a significant shift by buyers towards fully renovated, finished, well presented and ready to move into homes.
While many Newcastle suburbs continue to provide attractive investment opportunities, the now more established suburbs such as Wickham, Carrington, Mayfield, Islington and Hamilton, which supported the renovation market for many years are now considered too expensive, meaning that the search for good quality renovation options has been taken further afield to suburbs such as Wallsend, East Maitland, Tenambit and the surrounding older suburbs. Other growth suburbs considered to offer good investment opportunities include the Hunter suburb of Bellbird, which experienced an average rate of capital growth of 6.6% pa over the last ten years, Cliftleigh, Farley, Lochinvar, Rutherford and Thornton.
*{Source: Nila Sweeney - Financial Review: The regional housing markets where prices are set to surge August 15, 2023}
