Professionals Real Estate The overall improvement in the Western Australia real estate market is underlined by growing expenditure on home renovations, according to David Hobbs, CEO of Professionals Real Estate Group.
Mr Hobbs said that the latest ABS figures on building activity show that during the December 2009 quarter, the value of work commenced on home renovations topped $192 million in Western Australia.
“This represents a jump of 34% in the value of work commenced on home renovations compared to the same period for the previous year. When confidence rises in the real estate market, home owners are more confident about spending money on improving the overall quality of their homes. Professionals is finding that rising property values are also encouraging property buyers to purchase older style homes in more affluent suburbs for the purpose of renovating these properties. Properties in many inner and near city suburbs as well as a number of well established coastal suburbs are competitively priced and in some instances some homes can be purchased at near land value. In particular, Professionals is finding this trend most prevalent in suburbs such as Sorrento, Trigg, South Perth, Como, North Perth, Mount Lawley, Ardross, Subiaco and Claremont. “As building costs begin to rise during the coming year due to improving economic conditions, Professionals predict that spending on home renovations will increase as more property buyers choose to renovate an established home rather than building a new home,” he said.
Mr Hobbs offer the followng tips for property buyers considering purchasing an older style home for renovation purposes, then you should consider the following points:
- Dont make an emotional decision when buying an older style property. Many people fall in love with the idea of renovating an older home without fully taking into account the financial cost.
- Be careful not to overcapitalise your home through home renovations. For example, you could spend $100,000 on home renovations and your property may only rise in price by $50,000 because of the location of the property. The home might be in a good area but in a poor location such as a busy road.
- Check out other older style homes in the local area that have been renovated. If these homes have had only minor renovations then it could mean that land values in the area are not high enough to justify major renovations.
- A good local real estate agent should be able to give you an indication of which properties have been bought for renovation and which have been renovated and sold.
- A general rule is that properties that are closer to the city centre or ocean offer the best returns for home renovations because land values in these areas rise at a higher rate than outer suburbs.
- If homeowners are undertaking renovations in your local area, find out what is the most common type of renovation. For example, homeowners might be adding an extra bathroom rather than an additional bedroom because this is proving popular in the area for resale purposes.
- Most people make the mistake of trying to undertake home renovations themselves. This can prove costly mistake because a poor standard of work, will only devalue the property.
- Character homes, in particular, require a higher standard of renovation work and you may need to carefully select tradesmen with past experience in this area to ensure that the work is properly completed.
- If you are considering buying a home for renovations have a strict budget and work within that financial plan. A common mistake for home renovations often overextend themselves financially.
- Make sure that you have a flexible finance package in place to cover any unexpected spending.
Please click here to view the pdf version of this article
