Australians aren’t just keen homeowners, we’re also enthusiastic renovators. If the growth of mega hardware stores in the suburbs hasn’t convinced you of this, the $20 billion we collectively spend each year on home improvements should. But when it comes to any work done on our homes, in many cases our most valuable asset, it pays to get professional advice.
The change of seasons is often a time when we think about renovating – putting in a pool in time for next summer, or adding an extension to give the kids room to play. However building advisory service Archicentre is warning that poorly planned or constructed renovations can do more harm than good for your property’s value.
Some of the worst renovations they’ve seen include character homes with unsympathetic extensions, houses painted in garish colours, and money poured into expensive kitchen fittings at the expense of light and space.
According to Archicentre, one of the biggest renovating mistakes can be changing the market segment that your home fits into. For example, converting a three bedroom house into a 2-bedder with a large ensuite could potentially wipe as much as $100,000 off the value of the property.
While this sort of scenario is definitely one to avoid, a common pitfall is overcapitalising. This happens when your renovations cost more to complete than the value they add to the home.
This may not be so bad if you have no intention of selling up in the near future. But if you’re renovating with the aim of making a capital gain, overcapitalising is financially disastrous. The only options are to cop a loss when you sell, or hold onto the property until values climb higher – in today’s slower market that will take time.
When it comes to the type of improvements that will – or won’t, add value, there are no hard and fast rules. However, kitchen and bathroom makeovers – so long as you don’t go berserk with expensive fittings and fixtures – are usually a good bet to boost value, and in recent years outdoor living areas have grown in popularity. The jury’s out on pools and spas though – plenty of people just don’t like the maintenance involved.
The only way to get a reasonable idea about whether your home improvements will be a sound investment is to speak with local real estate agents (free), or a valuer (for a fee). They will know the sort of designs and features that buyers in your area are willing to pay for.
Attending a few ‘open home’ inspections is an easy way to get a feel for current market prices in your suburb, and this is essential to avoid overcapitalising. Make a note of those homes that sell quickly as this will also indicate what’s popular among buyers.