Latest NewsRenovations That Can Add Value to Your HomeFriday, 10 February 2017

With property prices skyrocketing in the past year, many home owners may be thinking about using their equity to renovate.

ABS data shows Sydney property prices increased 20 per cent, yet the Housing Industry Association says investments in renovations dropped.

"In 2008 and 2009, the total investment in renovations in NSW declined by 5 per cent," says an economist with the HIA, Matthew King.

"Our expectation is that based on the current trend of significant house-price growth and the improved labour market outlook, we're forecasting 7 per cent growth in 2009-10."

King says the HIA isn't budging from that expectation, even with the recent cooling of the property market. But it seems we're set to do most of our renovating this year rather than next.

"We expect that the rate of growth [in renovations] won't be as strong in 2010 and 2011 and one of the contributing factors will be that house-price growth appears to be slowing," he says.

The founder of GDB Architecture, Graeme Bell, is hoping to capitalise on the renovation to his Cammeray house when he puts it to auction through LJ Hooker Mosman on July 1.

More than $1.5 million is expected. "I've spent most of my weekends over the past four years on the renovation, much to my wife's disgust," Bell says.

The $220,000 renovation - made less expensive because of his expertise as an architect - includes the kitchen ($28,000), which appears on our cover; two bathrooms ($20,000 each); and a loft conversion from storage to a bedroom ($10,000).

"I'm selling this to move on to my next unrenovated house," he says, "much to my wife's horror."

So which are the renovations that are going to send our property values sky high? Estimates on increases in value are based on a house valued at
$1 million.

 

THE FRONT

Agents' opinion on added value: $40,000-$100,000.

The facade is often the first thing buyers see - either in advertising or in a drive-by. That's why improvements to it are among the biggest value-adds for your house.

The NSW manager of Archicentre, Angus Kell, says an external makeover might include decluttering and maintenance such as cleaning the roof, tidying the front garden and painting, can cost from $2000-$15,000, depending on the work involved.

"People gain confidence if a property looks well maintained," says a principal of the eastern suburbs agents GoodyerDonnelley, Debbie Donnelley.

Sarah Lorden, of Sarah Lorden Real Estate in Balmain, agrees. "You don't get a second chance at a first impression," she says. "Tidying up the exterior; touching up paint work, often you don't have to repaint but you can have the house washed; fixing fences or locks and window frames, all that sort of thing."

 

LANDSCAPE

Added value: $50,000-plus.

"Landscape is really important," Kell says. "From the street it sets up a good picture of the house ... At the rear, it is about enlarging the outdoor space: providing lawn for kids and trees for shading."

Geoff Smith, of LJ Hooker Mosman, emphasises the benefit of privacy provided by landscaping. "If you have a privacy issue, some buyers will say, 'I am not buying at any price.' The more privacy, the more buyers,"
he says.

 

ADD A DECK OR TERRACE

Added value: Up to $100,000.

Creating outdoor entertainment space adds big value. Kell says a deck costs between $10,000 and $25,000.

"Adding an outdoor living area that leads off the indoor entertaining area can make a big difference to value," says Simon Pilcher of McGrath Inner West.

 

ADD A BEDROOM

Added value: $150,000.

An extra bedroom is a significant way to increase value, particularly as Sydney is currently experiencing the highest population growth since the late 1960s. Kell estimates a 20-square-metre room costs $50,000-$70,000.

McGrath's Bethwyn Richards says adding a bedroom markedly lifts value.
"If you are comparing two- and three-bedroom semis, the price jump is significant," she says.

 

CONVERT AN ATTIC

Added value: $80,000 with drop-down stairs, $150,000 for usable room with fixed stairs.

Kell estimates it costs $20,000 to convert an attic for storage and $40,000-$50,000 to turn it into a home office or bedroom.

The latter involves strengthening structure, insulating, adding an operable skylight window and installing stairs - either drop-down or permanent.

But there are challenges, such as where to locate the stairs without messing up the lower-level layout.

"Attic conversion is a definite bonus, especially in areas like ours [the inner west] where land size is only around 180 square metres. Even with pull-down stairs and lining, an attic conversion will make the house more saleable," Pilcher says.

 

UPDATE YOUR KITCHEN

Added value: about $100,000.

Kell estimates the cost at $20,000-$40,000. He says if you spend more and make a structural change, you will get a proportionally larger increase in value.

"If you open up by taking a wall down, to make the living space more open-plan, to make it look and feel bigger, you really add value," he says.

Donnelley says: "A kitchen can make or break a sale."

She recommends not skimping on quality appliances, especially in suburbs where expectations are high. "We find when people spend money on a makeover, they always get it back," she says.

 

ADD OR UPDATE A BATHROOM

Added value: $100,000-plus.

In terraces on the lower north shore, there tends to be just an upstairs bathroom, while in the eastern suburbs, the bathroom is generally downstairs, Kell says.

Both would benefit from a renovation to create an upstairs bathroom and a guest toilet downstairs.

He says it costs $20,000-$30,000 to add a bathroom and $10,000-$15,000 to upgrade one.

The main issue is the trade-off of space to introduce a bathroom and, in very old houses, whether you need to upgrade the sewer line back to the mains (which can cost from $7000 to $12,000).

John Anderson of Di Jones believes it is worth the effort and outlay, particularly in unrenovated Paddington terraces, which traditionally still have their bathrooms downstairs.

"If you can put a bathroom on the same level as the bedrooms it is worth its weight in gold and can improve the price significantly," Anderson says.

 

ADD A HOME OFFICE

Added value: $100,000.

"A dedicated study is a smart idea, as more people are working from their office just three days a week and from home the other two," says Mary Curran, of Ray White Lower North Shore.

Kell says: "A good home office can add great value. Typically it has a separate entrance (not through the living space), internet connection and data cabling."

He says a substantial home office costs $50,000-$70,000.

 

GREEN YOUR HOUSE

Added value: $30,000-plus.

Kell says according to an Australian Bureau of Statistics study, greening your house adds far more value than initial outlay.

The report estimated that on a 10-star rating basis, every star the house went up in energy efficiency it added 3 per cent in value. (See
nathers.gov.au.)

Kell estimates it costs $15,000-$40,000 to green your house: ($2500 to insulate, $2500-$5000 for solar hot water, $800 for energy-efficient lights and water-efficient fittings, $2000-$3000 for a grey water system, $500-$1500 for drip irrigation and $5000-$15,000 for photovoltaics).

 

BUILD A SWIMMING POOL

Added value: May increase or decrease value.

Donnelley says while they are popular among families with young children, swimming pools can stop people buying a house.

"You are better off not to have it, you can cut your market in half on the selling side," she says.

Richards is also sceptical. "I've sold houses in Woollahra where the buyer fills it in," she says. "It is very hard to judge. Half the buyers want it and half don't."

Kell says, if you do proceed, get a fixed price. He estimates cost for a swimming pool to be $30,000-$60,000, with a plunge pool costing $20,000-$40,000.

Another piece of advice: "Make sure the swimming pool has a second value," Kell says. "That it is an integral part of the design of the house, so you get an aesthetic as well as practical benefit."