- Needs must in a rising market. Buy what you can afford, and do it up
- 79% of first home-owners are looking to renovate soon, a survey found
- 85% of men are planning to renovate soon, compared to 74% of women
It can be daunting buying a ‘fixer-upper’, but when property prices are rising at their fastest rate since the 1980s, needs must.
According to Finder’s First Home Buyers Report 2021, which surveyed 1,028 first home buyers, 79% are already planning to renovate their new home.
The research found one in five (22%) plan to renovate immediately after buying, while 30% will do so within the first year.
Sarah Megginson, Finder home loans expert, said that the property boom had instilled a fear of missing out.
“With property prices showing no signs of slowing down and interest rates at an all-time low, first home buyers are getting creative … to get into the market.”
“In a hot market, it’s not always possible to buy your ideal home. What some first home buyers are finding is that their best chance to get on the property ladder is by purchasing a ‘fixer-upper’ in a suitable suburb.”
Sarah Megginson, Finder home loans
For city dwellers, 82% of first home buyers intend to renovate sometime down the line, compared with 75% of those living regionally.
“Australians have spent more time at home in the past year, and for many, our kitchens, bedrooms and dining rooms became our new offices.
“Along with government incentives to renovate like the HomeBuilder scheme, which expired last month, this has led to a boom in home makeovers.”
The data shows men are more intent on renovating than women, with 85% planning some form of renovations in future, compared with 74% of women.
It’s not usual that your first home is your dream home, she said.
” [Mine] was a two-bedroom apartment and the walls were made of Besser block,” she said.
“The fixtures and fittings were cheap and flimsy, and the back courtyard was so tiny you could almost touch both sides if you stood in the middle. But, it was affordable and it got me on the property ladder.”
Buy, get in, and work your way up the property ladder, is the advice.
“Digging into your mortgage or refinancing is the cheapest way to fund a renovation with the current low-interest rate environment,” she said.
“If you don’t have enough home equity to fund your project, try asking your lender to value the home based on its post-renovation value.
“Alternatively, a personal loan could finance up to around $100,000 worth of works, but consider how much you’ll pay in interest before borrowing a big chunk of money,” Ms Megginson said.
How to budget for a renovation
- Source multiple quotes. Obtain quotes from at least three different professionals for each major task. This will help you to get the best deal and be able to estimate your overall renovation cost.
- Break it down. At the costing stage, split out your individual costs for each part of the renovation. For instance, if you’re planning to tile a wet area, you should separate the costs for each separate task (e.g. waterproofing, tiles, labour) as this will help you keep tabs on your expenditure.
- Allow for hidden costs. Having a contingency buffer of 10–20% of your budget will come in handy for any expected costs or council fees you hadn’t accounted for.