With property prices rising, first-time homeowners are clamouring to get in on the action while they can still afford to. This is forcing them to buy older properties in need of renovation.
A recent Finder survey reveals that more than half of Australian buyers plan to renovate their newly-bought homes. One-fifth of them will renovate immediately after taking ownership. 23% will renovate within five years.
Low property stocks and fast increasing prices have forced many young people to compromise on their property purchases. Many buy homes that need some TLC in the suburb of their choice.
According to the survey in NSW, 84% of first-time homeowners would buy to renovate. While in Victoria and Queensland 77% and 75% respectively had plans to renovate. In NSW more than 50% of first-time homeowners would renovate their home within a year of buying it.
82% of those buying in the city would renovate while in the regional districts only 75% would. At 79%, owner-occupiers were less likely to renovate than investors at 85%. Men, at 85%, were more determined to renovate than their female counterparts at 74%.
Many first-time homeowners plan to renovate shortly after buying, but they’re running out of funds as property prices rise amid high demand.
Very few first-time buyers have the skills to do a major renovation from scratch so most will have to move in and then tackle smaller projects over time.
Last year Australians took on renovation projects to bathrooms; kitchens are outdoor spaces in the main. In the process, they spent on average $63,118.
In Sydney, first time buyers are looking further afield for properties and they are willing to take on older homes requiring work. If they don’t include older homes, they limit their exposure to properties in their price range.
The First Home Loan Deposit Scheme offers buyers an opportunity to buy a property of up to $700,000, paying a deposit of just 5%. People who seek property in this price range will have to look beyond the city centres or go smaller or older and renovate.
Buyers should be cautioned to understand the cost and time taken to do renovations. They should add 10% to the estimate of costs to ensure that they don’t run out of money or underestimate the overall cost of buying and renovating.
With prices running ever higher buyers are just not able to save before they buy as they may have to pay a lot more if they wait.