Much has been said about the falling property market of Sydney, but many people fail to maximise the opportunities in the suburbs such as the west, which continues to benefit from renovations.
The October report from property valuation and advisory firm Herron Todd White confirmed that a lot of Aussies were able to grow their capitals via home refurbishments in the western suburbs.
“House flippers often take on the form of small scale tradesmen as a side project. They look to take advantage of their own skills and contacts within the building industry to minimise costs and maximise profits that can be made in a relatively short time frame,” the study stated.
It was noted that the market was largely supported by investors, who are looking for above average rental returns, and homeowners who are trying to earn additional income.
While most of these financial goals were achieved by means of granny flat construction, Western suburbs can provide more options for first home buyers looking to renovate or rebuild. The area boasts of a broader range of affordable properties, growing population and extensive infrastructure projects currently underway (such as West Connex and Western Sydney Airport).
Careful decision making, though, is essential before starting any home improvements.
As capital values level off throughout New South Wales’ capital, there might be a rise in homeowners opting to renovate, and while this move has always been deemed to increase the value of one’s asset, it is important to note that renovations and extensions come at a price.
Another factor that needs to be considered when renovating an existing property is the exit and entry costs link to selling and buying property in Sydney.
“Growing families are often faced with the choice of selling and upsizing their family home or potentially extending and renovating. Exit costs are one consideration, with other factors such as existing location and surrounding infrastructure such as public transport and local schools,” explained Herron Todd White.
The good news? Although renovations can be costly, homeowners were observed to have many years of strong capital growth with which to leverage borrowed funds if required. In addition, renovations in recent years were able to deliver satisfying profits. “[They] have generally paid off and minor mistakes or budget blowouts have been somewhat mitigated by the increasing capital values of property throughout Sydney.”