Every homeowner or prospective homeowner today will be aware of the existence of stamp duty, the tax that homeowners pay everytime they purchase a new property. According to Domain, stamp duty nowadays costs around $50,364 when purchasing a median-priced house in Sydney; $49,712 in Melbourne; and $15,851 in Hobart (a city where stamp duty is lowest). On top of stamp duty, purchasing a new house involves other ‘hidden’ costs such as legal fees, real estate agent commissions, loan fees, and removalist fees. So with that being said, is buying a new home worth it in the current real estate climate, or is it better to renovate and upgrade your existing home? As with most things, both strategies have merit. Both options require considerable time, energy, and financial commitments, and both options will come with their own sets of hassles. Although a decision as significant as this one should ultimately be made with you and your family’s specific circumstances and requirements in mind, we’ve compiled a brief guideline of the questions you should be asking when weighing in on the decision to move or renovate.
1. Are you emotionally attached to your home and/or your community?
Financial considerations are obviously significant in this debate, but it’s important to also weigh in on how your current home fits in with your current lifestyle, family needs, and social needs. How do you feel about your neighbours and your surrounding areas? Are there good schools, restaurants, café, shops around? How does your location effect your work commute? These question should ultimately help you determine whether your current home suits your lifestyle and family needs. If you’ve planted your roots in your current locality, moving might be too big of a change and renovating may be the perfect option that’ll allow you to have your cake and eat it too.
3. Are you expecting your family to increase or decrease in the next five years?
One of the biggest reasons for selling and buying a new home is to adapt to an increase in family members, or to adapt to a decrease in family members. If you’re expecting your family size to increase in the next five years, upgrading to a larger house would make sense. Unless your property comfortably allows for it, extending your home to add additional rooms may prove to be a larger headache than it’s worth, or may even prove to be impossible due to permits and land restrictions. Alternatively, if you’re expecting your family size to decrease in the next five years, downsizing could be a good idea. By selling your larger home and buying a smaller one, you can get rid of the unnecessary extra space and potentially make a profit from the sell.
4. Are the problems in your current home unfixable?
A renovation or remodel can fix many problems, but there are some problems that are inherent to your current house. For example, do you have neighbours you simply cannot tolerate? Does your home have a large garden, backyard, or frontyard that you struggle to maintain? Are you driving hours to work or to school everyday? If the problems that you have with your current home are ones that cannot be resolved by physical means, then you have two options: continue dealing with it or move.
5. Will you earn back the upfront costs?
If you’re thinking about buying and relocating to a new home, make sure that you’ll be in the new place for long enough to recoup the costs of taking out a new mortgage and moving. On the other hand, if you’re considering renovating or remodelling, ask yourself what the average return on investment looks like for the work you’re considering.
According to Domain, a kitchen renovation project costs $16,883 on average, while bathrooms cost $12,460, floors cost $9738, a new deck costs $12,392 and an outdoor revamp costs $11,446. A major, whole house renovation would obviously cost much more and would only be worth it if you’re planning on staying at your current home for the next five years (at least).
6. Does your time schedule allow you to renovate?
When you sell a house and decide to move, the timeline (for the most part) is pretty straight forward. The biggest uncertainty is typically regarding how long it’ll take to get an offer. However, once your home is under contract, you should be able to predict the time to close with relative certainty. Remodelling, on the other hand, requires more patience and flexibility. Your contractor might tell you that the renovation will take eight weeks, but could then end up extending the deadline if they run into changes, issues or delays. Home improvement projects often require high levels of commitment in terms of energy and patience. If you’re planning on undertaking a large-scale renovation, you’ll have to figure out where you and your family will live during some stages of the renovation process. Of course, listing and selling a house is also time consuming, and so is packing and moving. You’ll have to determine which option is the most feasible in your family’s particular context and make the decision accordingly.
Ultimately, a decision as significant as whether to renovate your current home or to move to a new home should be made independently according to your family’s specific circumstances and requirements. Before your make a decision, be sure to get in touch with local real estate agents, renovation or remodelling companies, and take a look at the housing market. As always, we welcome any and all enquiries regarding any potential renovation, remodelling, or extension projects.