RENOVATION COSTS ARE UP, SO WHAT’S NEW?

RENOVATION COSTS ARE UP, SO WHAT’S NEW?

Archicentre, the architects’ building advisory service has reported its finding this week that the costs of renovation have jumped up in the last 12 months by 10%. According to Archicentre, the costs are related to the lack of apprentices in the building industry, which means we are paying more for fully qualified builders to knock up a side gate because there is no cheaper help around.

It’s easy to see that anything we do to make our homes more comfortable will cost us money, which we expect to get back when we sell it. We invest in the property now, for a better return later. When we renovate extensively, we expect a premium price when we sell down the track. As more Australians buy expensive houses, the simple result is, “more expensive houses”.

The rapid rise in residential property prices over the past few years is the result of many factors including the ability of more households to borrow more money. The rate of growth in housing supply is relative to the growth in the number of households. Right now, prices are holding, so don’t expect much growth this year. If you are planning a major renovation then you are probably planning to stay in the house for at least another couple of years.

Yesterday, the Bureau of Statistics announced that the cost of building a new house rose 5.3% in the past year whilst the cost of non-essential luxury goods has dropped. Whilst it will cost us more to have the builders convert the spare room into a media room, the cost of fitting the plasma TV and entertainment system has dropped by about 20% since last year. That new garage will be 10% more than last year but the new car to go in it, is down nearly 3% – so what are you waiting for!

Even in a flat market, the number one topic of the Mosman Café scene is still real estate and the number one sport is now speculating on what other people’s property might be worth. Yesterday, the Treasurer predicted that inflation will remain in the Reserve’s target range, suggesting no interest rate rises. Many economists however, are backing a rate rise late this year!

Whilst the figures released yesterday show a decrease in the cost of domestic travel and accommodation meaning we can take cheaper holidays in Australia, they also report a rise in the cost of beer and takeaway food when we get there.

Like other markets, the Sydney real estate market travels in cycles, is subject to highs and lows and is naturally influenced by a variety of factors. The key economic factors of historically low interest rates, strong levels of migration, high employment rates and solid economic growth, all point to positive influences in the property market for the next financial year.

Importantly, the Sydney market is made up of many niche property markets and Mosman has micro niches of its own so changes across Greater Sydney will have less pronounced effect in our micro climate than might be reported in the general press.

Certainly our outlook for the next few months is for more of the same, although we have already noticed increased interest from buyers and we anticipate an even stronger market activity following the election.

If you are thinking of selling, and you are realistic, you will find buyers still keen to compete for good properties. Robert will be back from Bali in time for VRN next week so thanks for listening, hope to see you at an Open House soon.

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