House prices are tipped to remain stable this year, with the almost annual double digit house price growth of the last decade a thing of the past, reports show. So how can a homeowner or investor hope to add value to their property if prices are flat?
Here’s a guide to help you add the most value, without overcapitalising.
Whether you’re thinking of selling your property and want to boost the value with a little renovation, or just improving the place to live in, the changes don’t need to be extravagant. In many cases small repairs or subtle design alterations can make a significant difference to the value of your home.
Renovate to add value
Property expert Andrew Winter, host of Foxtel’s Selling Houses Australia, said renovating can be a great way to add value to your home. But, he said, you’ll have to be firm with your yourself.
“If you’re renovating to sell you’ll have to be firm with your budget, as every cent you spend has to be recouped at the other end,” he told News Ltd.
“Would a $20,000 new kitchen add $50,000 to your selling price? Or would adding another parking spot be just as effective in upping the sale price while costing a lot less. It pays to do your research on this.”
John McGrath, chief executive of McGrath Estate Agents said the rooms that generally add the most value are the living spaces and kitchen areas.
“If you get these right you can invest $100,000 and double the value in weeks. Get it wrong and you can end up losing money in the process,” he told Money magazine.
Find the most effective finance option
Renovating a house or unit can bring great rewards, but you need to find the money first, said Money magazine editor Effie Zahos.
“Of course the best way to fund renovations is through your savings. That way you won’t pay interest on the work you do, which makes your profit margin all the sweeter,” she said.
“But it could take around three years to save a $25,000 renovation kitty, if you put away $150 a week in an online savings account. An easier and faster way is to redraw any equity out of your home loan.”
But, she warns, take care because borrowing an extra $25,000 on your mortgage may only increase your repayments by about $45 a week but over 25 years that can add $40,000 to your total interest bill.
Other options may include topping up your home loan, taking out a personal loan or even using a credit card and the best option for your renovations will depend on the size of your renovations and your plan to pay it back. For more information, use a financial comparison site such as RateCity to help you on the right track, or talk to a financial adviser.
Meet the market
Improving your home’s value can be a battle of emotion versus finance. You may never recoup the costs of a freestanding bath imported from Milan if it’s far beyond the luxury spectrum of a first home buyer property. If your resale market is first home buyers, don’t pimp it out to the tastes of a 40 or 50 year old with a penchant for Coco Republic.
Once you have an approximate value of your home, Winter recommends visiting the neighbours.
“Go and look at other homes that are on the market in the same bracket as yours. Talk to the agents about popular selling features in these particular homes. It’s about following the crowd.”
The information about what’s popular is out there for you to find, he added. Your local hardware store will be able to point you towards popular paint shades, flooring specialists will tell you what people use in homes like yours. And if you’re not skilled in the areas you need, pay to get the advice and help of quality professionals.