Should You Build, Buy Or Renovate?
Are you a budding property baron weighing up whether to build, buy or renovate a home in 2022? While each has their perks, it’s important to do your research.
In Australia, our rich and colourful property market means that investors have plenty of choice when it comes to getting the best bang for their buck. In contrast, the same also applies for owner occupiers, particularly in relation to how they go about bringing their equivalent of the perfect home to life.
However, there’s no doubt that we all live in a very different economic landscape when compared to even just two years ago. While large-scale influences include a developing war in Europe and a once in a generation health crisis, on the home front we’ve also been battling with supply shortages, the rising cost of living and a very competitive property market.
As such, choosing to buy, build or renovate a home has been on the minds of many Australians, particularly given the ever changing conditions linked to each option. While the best choice will often boil down to your own individual circumstances, what factors should homeowners consider before settling on a winner?
The Case For Buy vs Build vs Renovate
Firstly, the best option to choose from between buying, building or renovating will almost always depend on your personal circumstances. Factors often include how much time, funds and patience you have to navigate each process, and what your long term goals are.
It’s also worth remembering that a property investor with a large portfolio isn’t going to have the same priorities or vision as a young family on the hunt for their forever home or a first home buyer. Keeping this in mind, let’s assess the key points of difference between each path.
Unless you’ve been living under a rock, the property market has been dominating the headlines right around Australia. With a widely anticipated cash rate hike announced in the middle of an election campaign, many industry experts are predicting that the era of the seller’s market is finally over.
However, buying property in Brisbane is unlikely to be as exposed to market fluctuations as we’ve seen in the likes of Sydney and Melbourne. With the river city’s median house price currently sitting close to $850, 000, we haven’t been subjected to the significant drops and lower clearance rates that our southern neighbours are beginning to experience. Depending on your suburb and dwelling of choice, buying will always be a viable path despite market fluctuations. After all, the great thing about buying in Brisbane is that there’s quite literally something for everyone.
For those considering building, it might be a different story. Combined with several federal and state government incentives plus the early release of superannuation, the onset of the pandemic saw the Australian construction industry arguably experience too much of a good thing.
As a result, homes are now taking twice as long to build due to increased demand, timeline blowouts thanks to ongoing lockdowns, and the building materials shortage that the entire world is currently grappling with.These delays have only been compounded thanks to the upcoming 2032 Brisbane Olympics, and recent batches of wild weather that have seen the demand for tradies soar.
For builders, the materials shortage also means higher costs for the limited access to materials. This is then compounded by pandemic related shipping and transit delays, and by the time the builder finally gets his or her hands on the goods, they may already be liable to pay daily fees for not completing jobs by the contracted date. For clients, the frustration is further aggravated by having to unexpectedly fork out for rental costs if their home is unlivable.
As a happy medium, thousands of Queenslanders have opted to renovate. While this process often allows you to stay in your own home while the work gets underway, renovating also provides an opportunity to modernise a space, craft it to something more in like with your personal taste, and also provides a great opportunity to boost a property’s value. In fact, 2021 saw one in three Australians renovate their homes with an average spend of $26, 000 per project.
For investors or owner occupiers looking to complete a renovation as a means to boost a potential sale price in the future, the golden rule with most home renovation projects is to avoid overcapitalisation. If you have spent $200, 000 on renos, but only made a $100, 000 profit in the event of a sale, then your home renovation will have effectively cost you money instead of making it. Instead, experts recommend spending 10% of your current property’s value as a safe approach.
Regardless of whether you opt to buy, build or renovate, each option usually calls for a trip to your local mortgage broker to carefully assess which option is best suited to your current financial position, and what your long term goals are – but where do you find one?
Partnering With Home Loan Professionals
Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.