RNZ<\/a><\/p>\nData from Trade Me shows that buyers are moving away from “doer-uppers” and property experts are divided on how much value people can hope to add by renovating a home.<\/p>\n
Trade Me said its survey of 2200 people found 49% of active buyers were looking for a house that already felt new or updated and 16% wanted a new build.<\/p>\n
“The DIY dream appears to be fading. Only 6% of buyers are now explicitly looking for a fixer-upper, while just 15% are interested in original-condition properties. In a market with fluctuating building costs, many buyers would rather pay more for a finished product than face the uncertainty of a renovation,” Trade Me Property spokesperson Casey Wylde said.<\/p>\n
Nick Goodall, head of research at Cotality, formerly Corelogic, said its data indicated that, at a high level, materially increasing the quality of a property would lift the value by 4% to 5%.<\/p>\n
He said that would need to be more than just a new coat of paint.<\/p>\n
“That figure is really looking at a full renovation. You’re probably talking about double-glazing the windows, modernising core areas like bathroom and kitchen.”<\/p>\n
But he said some first-home buyers who did want to buy an older house and do it up might be doing it so they could enjoy it, rather than to make money.<\/p>\n
“The improved value doesn’t necessarily matter if you’re going to be living in it for a decent period of time, and you get to enjoy the benefit of that improved quality, rather than doing it purely based on ‘if I spend $10,000, it’s going to increase the property value by $20,000’.”<\/p>\n
He said most owner-occupiers would not be doing up a property purely with the idea of financial gain. “The data sort of proves that you need a pretty full-scale renovation to even get a 5% lift \u2026 you don’t do it for that reason, you do it to live in yourself.”<\/p>\n
Investors would be looking at ways to improve the rents that could be charged, he said. “In which case they need to be pretty efficient with their renovation so they’re not overcapitalising on it.<\/p>\n
“[They might be] going to be making a more significant change, such as adding that extra bathroom so that the capacity of the property increases and you can charge a higher total rent as well.”<\/p>\n
He said there was also less of a difference in price with new builds at the moment than there had been at some points in the past, which meant more people could afford to buy new.<\/p>\n
“The cost to build has slowed down, the growth in the cost to build has slowed down. So that gap’s closed up. And certainly for many people, new builds will still be an option because, the lending restrictions allow for more people to go into new builds.<\/p>\n
“You don’t have to adhere to the LVR [Loan to Value ratio] restrictions. For example, if you’re buying new, DTI [Debt-to-Income ratio] is also exempted too. So I think there’s a few extra incentives to go and build new, which means that your demand might stay there.<\/p>\n
“It means you’re probably going to be getting a smaller house \u2026 looking at a townhouse, for example, but at least it’s new and modern and won’t require any work. And the good news from that perspective from a first home buyer’s view is that there is plenty of them, particularly in Auckland, but also around the country. And I think that’s part of the reason we’ve seen continued high first home buyer activity is because those entry-level townhouses, particularly in Auckland, have been so prevalent that the options are there and they’ve not taken advantage of that.”<\/p>\n
The morning’s headlines in 90 seconds, including the possible future of the Mt Maunganui campsite, a notorious murder faces the parole board, and have scientists found a new planet we could live on? (Source: 1News)<\/p>\n
But investors said it should be possible to generate higher returns from renovations.<\/p>\n
Property investment coach Steve Goodey said he had found that structural work such as replacing roofs or piling did not increase the value of a property because people assumed a house would have those things.<\/p>\n
But he said cosmetic work could be cost-effective.<\/p>\n
“If you buy well and get a discount when you purchase, maybe 10%, then you add 5% or 10% in value to it, that added 20% should allow the property to recycle and you can buy another property, too, which is always the way I have looked at it.”<\/p>\n
Ed McKnight, economist at Opes Partners, said 5% seemed low.<\/p>\n
“A standard rule of thumb is that is you spend $1 on a renovation, you want the value of the property to increase by at least $2. So for instance, if there was a $600,000 property and the investor spent $80,000 on a renovation, then a good investor would want the property to increase by at least $160,000 to $760,000. That’s a 27% increase in this example.<\/p>\n
“Often those improvements would be reasonably extensive, including bathroom and kitchen upgrades, repainting and potentially repurposing an old dining room into a bedroom.”<\/p>\n","protected":false},"excerpt":{"rendered":"Can you still make money buying a property and doing it up to resell? By Susan Edmunds of…\n","protected":false},"author":2,"featured_media":258770,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[138,219,42,687,43,244,40,38,41,39],"class_list":{"0":"post-258769","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-business","9":"tag-economy","10":"tag-headlines","11":"tag-housing-and-infrastructure","12":"tag-news","13":"tag-personal-finance","14":"tag-top-news","15":"tag-top-stories","16":"tag-topnews","17":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/258769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=258769"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/258769\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/258770"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=258769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=258769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=258769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}