Pros

Amenity

So long as the renovation is well executed and any redesign has broad appeal, it could enhance, not only the amenity for the owner remaining in residence, but also the market value for a future sale.

A Rising Market.

Depending on market conditions at the time including supply and prices trends it may prove more cost effective to renovate and stay rather than sell and buy a more modern property in the same area if a key motivating factor is to stay in or around the particular suburb.

The work is done.

Rising building are a factor in the buyer’s consideration when selecting a property consequently making properties in need of renovation less attractive to them. If the works are completed then not only the value but also the saleability of the property could be increased subject to the time elapsed before eventually going to the market.

Stay longer.

The nature of the renovation is important for instance the installation of a domestic lift or any design feature that might make the property more liveable to those less able may extend time the current owner may stay in residence and also add appeal to a future buyer seeking similar amenity.

Make sure you are getting paid for you time and input.

Notwithstanding any overriding factors, it would be reasonable that any renovation cost would create a margin in value for the owner. In simple terms if the renovation cost, say $200,000 it would be reasonable that it would add $280,000 - $300,000 in value to the property regardless of wether the intention is to sell immediately or not. To spend $200,000 dollars on a renovation to add that same value to the property would mean the time and inconvenience and most likely stress involved in the process was not considered and the owner has contributed this at no cost.

Cons

Cost

At present probably the biggest negative for renovating and staying is simply cost. On 7 October 2022 Core Logic reported the following:

“According to the national Cordells Construction Cost Index, residential construction costs increased by 11.0% over the 12 months to September, exceeding the 10% annual rise recorded over the 12 months ending June 2022, while the quarterly figure of 4.7% was higher than the previous quarterly figure of 2.4%. The most recent quarter’s figure was also above the 3.8% surge recorded over the three months to September 2021 when lockdowns were having a more significant impact on domestic supply chains.”

Local builders have recently advised us directly of costs of $4100 +GST per square metre for construction of a high quality Inner South residential property. Renovation costs per square metre are often higher than new building due to factors including demolition of exiting structures, designing around existing structures and unforeseeable costs revealed once works commence, especially in aged buildings.

Management

It is common to hear of negative experiences people have had with building and renovating. This is not necessarily the fault of the various consultants and builders undertaking the work, but often miscommunication and non aligned expectations from both sides. Professional project managers exist for a reason and the process of delivering building works, especially a substantial renovation, is often fraught with pitfalls for the inexperienced. Of course for additional cost a project manager acting for the owner can be engaged.

Delays

Especially relevant in the current environment. Shortages of labour and availability of materials may cause delays to the process triggering a domino effect on other timelines for example the lease taken on an alternative property for the duration of the works, the beginning of a school term or an employment or business related issue. Delays inevitably have a cost when it comes to building works.

Inconvenience

Apart from the cost of works there is the issue of inconvenience which may start at excluding the use of a significant part of the property and extend to completely vacating during works. Most would agree it is less than ideal living in a house while works are in progress and with current very low vacancy rates finding a suitable property and temporarily relocating can cause also significant inconvenience and associated stress.

Next Steps

The above is a brief discussion of some of the key points related to renovating versus selling and does not take into account your personal circumstances and requirements. Please feel free to contact us for a confidential and more in-depth discussion. We are happy to offer any insights we have gained during our 35 years experience in marketing quality property.

Renovate and Stay or Sell and Go?