No Better Time to Renovate: Costs Up Just 1%

Renovations, extensions and new home costs have increased only 1% in the last quarter according to Archicentre, the building advisory service of the Australian Institute of Architects, in its latest cost guide released today.

Archicentre's Victorian State Manager David Hallett said Archicentre expected renovations to increase in 2010 considerably with baby boomers renovating their family home for lifestyle reasons and to increase the value of their homes as part of their superannuation strategy.

With the average move costing $50,000 to $60,000 in property taxes, expenses and charges, a new bathroom renovation can be undertaken in the current home for $9,588 - $24,990 plus a new kitchen for $10,608 - $31,722.

Mr Hallett said rising house prices, interest rates and the cost of moving, estimated to be around $50,000 to $60,000 for the average move when property taxes and expenses are added, is likely to provide more incentive for people to renovate their current home.

"When people prepare a budget they see the benefit of investing in their homes for a return rather than hand over large amounts to Government coffers for property taxes and charges."

Mr Hallett said we are also seeing an increasing trend to alternative construction systems such as lightweight materials and low embodied energy which can eliminate some trades and offset cost increases in other areas.

"Balanced against this is that we are now seeing a shortage of suitably skilled tradespeople in some areas of the building industry, resulting in some price increases in labour due to the substantial increase in construction activity from the Government's stimulus package in schools, health and first home buyers areas.

"Whilst renovation costs at this stage are remaining reasonably static the major challenges for renovators and owner builders is to ensure that they get the design of the renovation correct to ensure it delivers a sustainable lifestyle on budget.

"For new houses and major renovations, the cost structure is approximately 46% on materials, labour 33%, and 21% on fees, levies, permits, taxes, and GST. The cost will vary for country areas adding 5% to 15% to the renovation."

Mr Hallett said that Archicentre, through its Architects Advice and Architects Design Reports, has often found that people have started renovations and then realised they needed to review their plans when they discovered, for structural or aesthetic reasons, the plan was not delivering the desired outcome requiring a costly redesign. . For example, the significant costs of replacing and upgrading kitchens and wet areas means that a master plan can ensure such renovations are optimised for value in relation to future potential additions to the home.

"With increasing interest rates and many people building and renovating for a financial return the original design process and material selection, which provides the vital information for costing and managing the budget, is the foundation for a successful and financially rewarding renovation."

Without a well planned design and management approach to a renovation people may find the returns they were hoping for are severely eroded by unplanned costly variations during the construction stage, Mr Hallett said.

Renovation Costs from the Summer Cost Guide

Bathroom (ensuite is less) $9,588 - $24,990
Kitchen $10,608 - $31,722
Laundry $4,182 - $9,894
Bedroom $4,080 - $8,466
Single Room 20m2 $4,794 - $10,302

Notes:
Prices include plastering, painting, wiring, plumbing, relocation or replacement of windows, the renewal of fittings and fixtures, cabinetry additions and surfacing eg. tiling. The estimates exclude stormwater drainage, paving, carpets, drapes, appliances or the construction of internal partitions to modify the layout of rooms. The upgrading standard is to medium-quality brick veneer or timber.

Media Enquiries:
David Hallett Victorian State Manager Archicentre (03) 9819 4577 Mobile: 0439 439 115
Ron Smith Corporate Media Communications Archicentre (03) 9818 5700 Mobile: 0417 329 201