To renovate or move? It’s a question you’re likely to ask yourself at some point - when a life change demands more space, or your living spaces start to look a little tired. Before you make a decision, take the time to carefully weigh up the pros and cons of both scenarios.
It's a familiar story for homeowners. When you first moved in, the house was perfect for your needs. A few years and a few children later, and there's just not enough space for everyone. Tired of living on top of one another, you decide it's time to move.
Or would it be better to stay, and expand and improve the home you already live in?
There are a few things to consider if you're unsure whether to invest time and money in your existing property or save yourself the effort and buy a bigger home – with a larger backyard, more storage space, maybe even a pool.
Peter van der Westhuyzen, Head of Institutional and Direct at Macquarie’s Banking and Financial Services Group, says ultimately, it depends on your reasons for wanting to make a change.
“It’s a really personal decision,” he says. “But the key thing is to really think about why you want to move or why you want to stay and renovate?
“For example, you may be in a certain life stage and you are about to start a family, or you have young children and the house is too small for them to grow up in.
“That said, your house may be in a great location, because it's close to schools, it's easy and convenient for transport, and you can see yourself there for the next five to 10 years. If this is you, renovating might be a good option.
“If, on the other hand, your property’s location doesn’t suit your needs or your future plan, it would be wise to look at what else is on the market – perhaps in a more convenient area.
“People often think moving will be cheaper, however with moving costs, agent fees and stamp duty to consider, the cost of buying a new home could add up to a decent renovation budget in itself.”
The case for renovating your home
Figures from CoreLogic RP Data show we're staying in our homes for longer, averaging 10.5 years today compared with 6.8 years in the mid-2000s
A few factors that may tempt you to stay and improve your home:
- You love your local community and have good neighbours and friends nearby.
- It's close to work or an easy commute.
- There's potential to add value to your property.
- You've been there long enough to have some equity, which will help you refinance.
However, if you need another bedroom or two – or something closer to a major rebuild – the cost (and time) involved in renovating may be off-putting.
As a rule of thumb, an attic conversion could cost anywhere between $50,000 and $100,000. A new bathroom or kitchen could set you back $20,000 to $70,000. Then there's the cost of living somewhere else while the work gets done – not to mention design costs, engineering and consultant reports and council fees.
“You might be renting for six to nine months somewhere else, which can be a big disruption to your life,” says van der Westhuyzen. “Renovating can also demand a lot of your time and energy, which might not suit your lifestyle.”
To avoid over-capitalising, it’s important to know the value of your home at present, so make sure you get a professional valuation first.
“Consider your property’s current value, alongside the estimated cost of renovating, and then get a sense of what your house could be worth in the future, based on a realistic assessment of the value your renovations could add,” says van der Westhuyzen.
“You’re less likely to overcapitalise if you spend time analysing various renovation scenarios first.”
“However, you may make a conscious decision to overcapitalise, if you feel you’ll end up with a property that meets your exact needs now and into the future. That's a very valid decision as well, but just make sure it’s a strategic one.”
When assessing the cost of renovating, it's important to check the true condition of your house, especially if it's old. Rising damp, dodgy wiring or rotting joists could add to the total cost of rebuilding. An inspection or engineer’s report could be a valuable investment, ensuring you have all the facts before you make a decision.
The case for moving to a new home
If you're not ready to engage an architect or go through the pain of council approvals, take some time to look at what's available in the market and get a valuation. If you're able to realise some capital gains on your property, you could put it towards a more suitable home in a suburb that’s convenient.
The costs of buying and selling property can be substantial, so don’t make the decision lightly. Think about what you will need for the next 10 years or more – including schools, transport links and all the things you consider essential to your lifestyle.
And before you make a bid on that new home, do the maths on how much it will really cost you to move:
- Stamp duty
- Selling costs, including advertising, agent fees and fixing up or styling your home.
- Moving expenses
- Immediate improvements to your new home
"Unless you buy a new build where you’ve selected every last detail, there's always something to do," says van der Westhuyzen. “Make sure you take every cost into account when you are making your decision.”
So should you stay or should you go? It comes down to whether it will be easier, and cheaper, to buy a new house that ticks all your boxes, or turn your current house into the home of your dreams.
- Make sure you really understand why you want to make the change. If the location is right, explore renovations.
- Renovating can mean significant disruption to your life, and may require you to move out of your home for several months.
- Moving incurs significant cost too. Make sure you calculate the additional costs of moving home to truly understand the implications for each approach.
Whether you are moving or renovating, call one of our home loan specialists today on 13 62 27 to explore your finance options.