Interest Rate Rises Make Renovation Cost Control Vital
Summary
21/10/2009
Archicentre News Release
21
October 2009
Interest Rate Rises
Make Renovation Cost Control Vital
Archicentre,
the building advisory service of the Australian Institute of Architects, is
urging home owners to take a conservative approach to renovating and not over-capitalise
their properties based on predictions of up to 20% jump in property values over
the next three years and increased interest rates.
Upper level framing taking shape on a renovation.
David
Hallett, Victorian State Manager of Archicentre said whilst design,
budgets and cost controlling are not at the sexy end of renovation, they
are the things that will make people money on renovation projects.
"More
than half of all Australians renovate at some point in their lives with
the hope of generating extra non taxable income when they sell the family
home, the principal place of residence.
"If
home owners get the renovation design wrong they can end up spending tens
of thousands of dollars to devalue their home or reduce its market appeal.
An example
is the young couple who turned a three bedroom home into a two bedroom
home by building a new large bathroom and walk in robe at great cost.
"When
the couple called the real estate agent to sell the property they were
stunned to find the removal of the third bedroom had devalued their property
by between 10% -15% as they had made it unmarketable to families with
more than one child - thus a large part of the market."
Mr Hallett
said renovators pouring money into expensive fittings such as highly expensive
taps and whitegoods in the kitchen and bathroom areas can often find they add
little or no extra value to the sale of the home, cutting into the financial
return.
Archicentre
is urging caution for home owners to ensure they maximise their profit return
by doing their homework and not bank on forecasts of property values.
"For many cashed
up home owners the renovation of the family home is often the last roll of the
dice to substantially increase their wealth in retirement by investing in the
family home which becomes a tax free investment when ultimately sold."
A discussion
paper for the Rudd Government's Pension Review earlier this year outlined a
bleak future for Australia's ageing workforce, with the majority of 80% of Australians
aged 65 and over getting the pension and relying on it as their major income
source.
"With a quarter
of Australia's population expected to be 65 or more by 2047, the use of equity
in the family home to boost retirement funding through renovation has become
an important national wealth creation strategy as well as underpinning jobs."
Archicentre
is urging home owners who are considering renovating as a way of generating
savings or boosting their retirement funds to make sure they do their homework
on the design of the renovation, cost, tendering and management of the project.
"Undertaking
a renovation is like running a small business by dealing with the many suppliers,
tradespersons, and gathering the materials, fixtures and fittings.
Archicentre
has polled its membership of over 800 architects on what requests their clients
were making to improve their homes through renovation.
Archicentre
is conducting a free seminar on renovation for home buyers and renovators.
6.30pm -
8.30pm Tuesday 10 November 2009
Renovating - Ten Things You Should Know About Renovating Before You Start
Venue: Yarraville Club, 135 Stephen Street, Yarraville.
The seminar will provide everything you need to know about the design and construction
of your renovation, including planning, permits, pit-falls and a case study
of a completed project with time for questions as well. For bookings please call 1300 13 45 13.
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