To renovate or relocate –that is the question. And according to new research, Australians are answering by rushing into Bunnings.
There has been a 21 per cent increase in the number of home owners choosing to renovate over the last three years, while the number considering selling their homes has dropped by 11 per cent, Westpac latest home ownership report says.
Those who are about to get married or have a baby are “increasingly prioritising renovating over buying a new home,” the report says.
This is because they do not want to face the stress of moving house.
“There’s no secret Australians love renovating but those who are reaching key life milestones, such as getting married or having a baby, may also be increasingly choosing to renovate to avoid the stress and the logistics of moving during an already busy time,” says Andy Wright, Westpac home ownership spokesperson.
The bug to renovate is strongest among millennials with 87 per cent choosing to renovate compared to 78 per cent of Gen Xers and 77 per cent of baby boomers. Renovating to lower upkeep costs has increased by 10 per cent while renovating to have a nicer home has decreased by 15 per cent since 2016.
The rising costs of stamp duty on home purchases have also deterred many families from buying residential property. Victoria has one of the highest stamp duty costs with an average of $31,970 followed by NSW at $25,190. Other states have a 5.2 per cent stamp duty cost of the purchase price.
“Taking into consideration the additional costs of buying a new home, including stamp duty and moving costs, home owners may find that renovating is a more cost effective option, particularly if you work out a budget first, are a savvy shopper and are happy to undertake minor renovations such as painting and tiling,” Mr Wright says.
The renovation trend supports recent research by Master Builders Australia which has forecasted a $44 billion boom in renovation over the next five years with the strongest growth in South Australia, WA and Queensland.
Here are five renovation tips:
- Make a list and start designing your renovation – failing to plan your renovation may end up blowing your budget
- Do the prep work yourself. You may be able to save some money in labour costs, if you are willing to get your hands dirty and undertake the prep work yourself including ripping up carpets or patching up the plaster before the tradies arrive.
- Call in the professional plumber and electrician to do the major works. If you attempt to do it yourself and get it wrong, it may cost you thousands.
- DIY the small tasks – minor renovations like tiling and painting can be easily undertaken if you attend a workshop at your local hardware shop.
- Shop savvy – a great way to get new furniture or fixtures is to buy them when they are discounted during sales.
And here’s how to finance it:
- Increasing your home loan can be a good way to go – it’s cheap, quick and easy. But watch you LVR – the ration lenders use to calculate their risks against the value of our house. Your lender will tell you.
- Considering refinance is a must – you could get your increase and lower your rate. In fact, the savings might mean your repayment doesn’t change much after adding the top up, depending on how much you are borrowing and the products being compared. Well checking the comparison sites.
- Personal loan (Commmunity First Credit Union, for instance, has an unsecured home improvement loan that can be used for this with a rate of 6.12%)
- If you’ve been saving and making extra repayments, you may be able to redraw on your home loan if you have the funds available.