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Renovations go through roof
RACHEL BROWNE
May 9, 2010
SOARING Sydney property prices have sparked a renovation boom as home owners capitalise on the value of their residences.
Construction bodies forecast the number of residential renovations in Sydney will double over the next three to four years.
Figures collated by the Housing Industry Association show that after five years in decline investment in renovations will increase by 7 per cent this year.
While Australian Bureau of Statistics figures show Sydney property prices have increased by 20 per cent in the past 12 months, renovation costs have remained relatively static.
''With property prices in Sydney increasing substantially in the past 12 months a lot of people are looking at the property they currently occupy and thinking of capitalising on the equity in their own home,'' said HIA spokesman Nick Proud.
Australian Property Monitors economist Matthew Bell said: ''Housing prices have risen at a much more substantial rate than wages so people are more likely to renovate because they can't afford to buy a better house in the same suburb.''
The cost of selling a house and buying a new one was also a factor, said Archicentre ACT & NSW state manager Angus Kell.
''The cost of relocation can add up to $50,000 in stamp duty, legal fees, agent's fees and moving costs,'' he said. ''If you have to borrow extra money to buy a more expensive house, you have to factor in rising interest rates as well.
''So people who like the area they live in are more likely to stay put and invest in the house they have and make the additions or alterations that suit their needs.''
Rising interest rates and stricter lending practices are also influencing the decision to renovate rather than sell up and move.
''People are less likely to take out a big loan to buy a more expensive home if they know interest rates are going up,'' Mr Kell said.
''And changes in the finance industry in the past couple of years mean banks are less likely to offer loans of 90 per cent of the value of the property.''
Councils in the inner-ring suburbs of the inner-west and lower north shore are reporting a surge in the number of development applications for alterations and additions to residential properties.
Development applications submitted to Marrickville Council almost doubled between April last year and April this year. For North Sydney and and Leichhardt councils they are up by a third for the same period.
Mr Proud said strong demand for skilled labour meant there were not enough workers in most trades.
''The pressure will start to build over the next year or so as the resources sector continues to take skilled workers out of the housing market and the ageing population takes people out of the workforce,'' he said.
''In addition we have renewed pressure in demand coming from the renovation sector.''
But Mr Kell said the winding up of economic stimulus programs was a factor.
''The Building the Education Revolution work will wind up early next year so there may well be an additional supply of contractors entering the market,'' he said.
RACHEL BROWNE
May 9, 2010
SOARING Sydney property prices have sparked a renovation boom as home owners capitalise on the value of their residences.
Construction bodies forecast the number of residential renovations in Sydney will double over the next three to four years.
Figures collated by the Housing Industry Association show that after five years in decline investment in renovations will increase by 7 per cent this year.
While Australian Bureau of Statistics figures show Sydney property prices have increased by 20 per cent in the past 12 months, renovation costs have remained relatively static.
''With property prices in Sydney increasing substantially in the past 12 months a lot of people are looking at the property they currently occupy and thinking of capitalising on the equity in their own home,'' said HIA spokesman Nick Proud.
Australian Property Monitors economist Matthew Bell said: ''Housing prices have risen at a much more substantial rate than wages so people are more likely to renovate because they can't afford to buy a better house in the same suburb.''
The cost of selling a house and buying a new one was also a factor, said Archicentre ACT & NSW state manager Angus Kell.
''The cost of relocation can add up to $50,000 in stamp duty, legal fees, agent's fees and moving costs,'' he said. ''If you have to borrow extra money to buy a more expensive house, you have to factor in rising interest rates as well.
''So people who like the area they live in are more likely to stay put and invest in the house they have and make the additions or alterations that suit their needs.''
Rising interest rates and stricter lending practices are also influencing the decision to renovate rather than sell up and move.
''People are less likely to take out a big loan to buy a more expensive home if they know interest rates are going up,'' Mr Kell said.
''And changes in the finance industry in the past couple of years mean banks are less likely to offer loans of 90 per cent of the value of the property.''
Councils in the inner-ring suburbs of the inner-west and lower north shore are reporting a surge in the number of development applications for alterations and additions to residential properties.
Development applications submitted to Marrickville Council almost doubled between April last year and April this year. For North Sydney and and Leichhardt councils they are up by a third for the same period.
Mr Proud said strong demand for skilled labour meant there were not enough workers in most trades.
''The pressure will start to build over the next year or so as the resources sector continues to take skilled workers out of the housing market and the ageing population takes people out of the workforce,'' he said.
''In addition we have renewed pressure in demand coming from the renovation sector.''
But Mr Kell said the winding up of economic stimulus programs was a factor.
''The Building the Education Revolution work will wind up early next year so there may well be an additional supply of contractors entering the market,'' he said.
