Home renovations can be a great way to add value to a property and increase rental returns — so what do you need to know before picking up the tools?
The growing popularity of home renovation programmes are encouraging more and more Australians to do just that — with the latest ABS figures for the last financial year showing Australians spent a whopping $7.7 billion on home renovations.
This represents a jump of $1 billion in home renovation spending over the previous two financial years. Back in 2013/2014, national expenditure on home renovations totalled $6.7 billion.
Overall, Australians are now spending on average $150 million every week on home renovations.
It's expected that spending on home renovations will increase further due to falling interest rates.
However, even in a climate of very low interest rates, property owners need to take a targeted approach to home renovations so they avoid over-capitalising their property.
The very first step property owners should take is to check the price of a renovated home in their local area compared to the value of their unrenovated home and determine if it really makes financial sense to spend the amount of money they are planning to spend on their home renovation project.
After this initial financial assessment, it is wise for owners to then take a highly targeted approach to their home renovations project by paying special attention to the following points:
- Focus on the front of the home as this will improve the street appeal of the property. If the existing home has dark brown bricks and old guttering then consider rendering the bricks and replacing the guttering. Also, if you invest some money in better landscaping this in turn will also improve the street appeal of the property.
- Inside the house you should focus on the bathroom and kitchen areas. Improvements in these areas traditionally deliver high returns when the property owner decides to sell.
- For ideas to improve the kitchen and bathroom areas, consider visiting new home display centres. These display homes will have the latest trends in new home design. They can also provide ideas on how to internally finish a home such as the colour of paints on walls and floor coverings.
- You should also focus on the outside living area of the property as much as the inside of the property. The reason being one of the biggest trends in the real estate market currently is a growing demand by homebuyers for usable outdoor living areas. It is an important new trend which is highlighted by the large number of project homebuilders in Western Australia who are now promoting alfresco areas as part of the new home package.
- Any renovation in this outside area should be fully integrated with the family and kitchen areas. This is because people want to move easily between their internal and external living areas especially during the summer months.
- It is important to ensure that you get local government approval for any major renovations to your home such as building an alfresco area or new external walls.
- If you are employing a builder to undertake your home renovations, check that they belong to a professional building organisation. In addition, you can ask to view recent work which they have undertaken in the local area.
About the Blogger
Shane Kempton is the inaugural Group CEO of Professionals Real Estate Group which has nearly 300 offices located throughout Australia and New Zealand.
Professionals have been operating in Australia for four decades and provide a wide range of real estate services to consumers.