Month in Review RESIDENTIAL PROPERTY - August 2021 - John Henderson Real Estate
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Month in Review RESIDENTIAL PROPERTY August 2021
A message from our CEO
Month in Review
August 2021
A primary method for overcoming the anxiety of uncertainty is to source reliable information.
A primary method for overcoming the anxiety of uncertainty is to source reliable information. Gathering the facts from experts in their field, studying
their analysis and understanding the outcomes allows us to draw our own fully informed conclusions. This approach can be applied across most spheres of
interest, but it is particularly prudent when it comes to property market analysis, especially in the current climate.
Many people have concerns about the coming months and years as we grapple with the financial fallout from the pandemic, but I’ve taken heart in research
delivered by trusted industry sources, and our own experts. Here we are, some 18 months into the pandemic and there’s cause for optimism about our
nation’s property sector. Analysis by our valuers aligns closely with several other sources. They suggest, for example, that the impact of the current Delta
outbreaks on house prices has been minimal, with any softening unlikely to affect long term growth trends.
These conclusions are well-founded with economists noting double-digit price gains across 2021 – some markets are even predicted to see an upswing
of 20-plus per cent for the year. And while it’s expected capital gains will moderate to some degree in 2022, they’re still anticipated to remain above the
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annual long-term average.
CEO
While we clearly operate in uncertain times this collation of information is cementing my positive long-term outlook for Australian real estate. It’s an asset
class of resilience and opportunity.
This month’s Month In Review also delivers readers the best possible market information.
In the residential section, our teams examined their service areas through the lens of renovation. Their observations and tips are
essential for anyone looking to tackle a property upgrade of either their home or investment.
Among the findings this month are:
• All markets – rising costs and time blowouts are universal challenges for renovators;
• NSW Central Coast – dual occupancy upgrades are gaining favour;
• Brisbane – builder-led renovations are attracting high-end buyers.
Please enjoy this latest edition of Month In Review.
Gary Brinkworth
2
Month in Review
The renovation revolution
August 2021
When you look across the Australian residential property landscape, there’s no doubt we love
swinging a hammer and wielding a paint brush.
Renovation is a rite of passage among homeowners. Who hasn’t wanted to stand back and admire their handiwork, convinced our sometimes-meagre
efforts will yield a vast uptick in liveability and equity?
So, while renovation activity has been well established over decades as a pastime for real estate owners, recent years have upped the ante. Since
late 2020, renovation activity has been a hot prospect among Aussies. Multiple factors, including government stimulus and low interest rates, have
delivered stellar conditions for those wanting to tackle a fixer upper.
In addition, long weeks spent locked down have resulted in itchy trigger fingers for those with a spray paint gun, and it’s not just to relieve the
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FEATURE
boredom of confinement. Extended periods in our homes have revealed their shortcomings. There are, in particular, millions of suburban and city
residents who’ve discovered just how small their abodes can feel. They want to improve their lot, and renovation is the path out.
This month, our residential teams dig deep and discuss the renovation revolution across their regions. They reveal the property types, price points
and suburbs where activity is most lively. Our experts also analyse what kinds of projects are yielding the best results.
While there’s obviously a wealth of information among these pages, there’s even greater abundance of local knowledge ready to assist you. Just go
direct to the source and contact your nearest Herron Todd White team.
In addition, long weeks spent locked down have resulted in itchy trigger fingers for those
with a spray paint gun, and it’s not just to relieve the boredom of confinement.
3
National Property Clock: Houses
Month in Review
August 2021
Entries coloured orange indicate positional change from last month.
Bathurst Dubbo
Burnie/Devenport Launceston
Canberra Tamworth
Albury Mildura PEAK OF
Central Coast South West WA MARKET
Geelong Wodonga
RESIDENTIAL
Approaching Starting to
Adelaide Gold Coast Perth
Peak of Market Decline
Adelaide Hills Hervey Bay Port Hedland
Ballina/Byron Bay Hobart Rockhampton
Barossa Valley Illawarra Shepparton
Brisbane Ipswich S’thn Highlands
Broome Kalgoorlie Sunshine Coast RISING DECLINING
Cairns Karratha Sydney MARKET MARKET
Coffs Harbour Lismore Toowoomba
Darwin Mackay Townsville
Emerald Melbourne Whitsunday
Geraldton Mount Gambier
Gladstone Newcastle
Start of Approaching
Recovery Bottom of Market
Albany
Alice Springs
Bundaberg
BOTTOM OF
MARKET
Liability limited by a scheme approved under Professional Standards Legislation.
This report is not intended to be comprehensive or render advice and neither
Herron Todd White nor any persons involved in the preparation of this report
accept any form of liability for its contents.
4
National Property Clock: Units Month in Review
August 2021
Entries coloured blue indicate positional change from last month.
Bathurst
Burnie/Devenport
Launceston
Tamworth
Central Coast PEAK OF
Geelong MARKET
Mildura
Approaching Starting to
RESIDENTIAL
South West WA
Peak of Market Decline
Adelaide Gold Coast Newcastle
Adelaide Hills Hervey Bay Perth
Albury Hobart Port Hedland
Ballina/Byron Bay Illawarra Rockhampton
Barossa Valley Kalgoorlie Shepparton
RISING DECLINING Canberra
Broome Karratha S’thn Highlands MARKET MARKET
Coffs Harbour Lismore Sunshine Coast
Dubbo Mackay Wodonga
Geraldton Mount Gambier
Gladstone Mt Gambier
Start of Approaching
Albany Darwin Toowoomba Recovery Bottom of Market
Alice Springs Emerald Townsville
Brisbane Ipswich Whitsunday BOTTOM OF
Bundaberg Melbourne
Cairns Sydney
MARKET
Liability limited by a scheme approved under Professional Standards Legislation.
This report is not intended to be comprehensive or render advice and neither
Herron Todd White nor any persons involved in the preparation of this report
accept any form of liability for its contents.
5
New South Wales
Month in Review
August 2021
Overview Homeowners can do this by using existing savings Property 2 is a similar four-bedroom, one-bathroom
Construction has certainly ramped in residential or refinancing and accessing equity in the dwelling brick dwelling that has been fully renovated and
property markets across the country over the to fund the renovation. presents well. This sold in May for $840,000.
past 12 months, and a large proportion of this
Western Sydney This shows a difference of $57,000 which is not a
activity has been in the renovation space.
Established suburbs in Western Sydney are prime huge amount given the work involved in renovating.
This month, our teams look at the renovation for the renovator market. Larger blocks and
revolution sweeping our nation. Not only do cheaper land allow for more options when deciding
they identify where activity is heightened, but to renovate.
also set out their ‘dos and don’ts’ of successful
This example of three dwellings in South Penrith
renovation projects.
highlights the importance of knowing your market
to ensure you get the best possible return.
Sydney
RESIDENTIAL
Since the COVID-19 pandemic began, homeowners Property 1 is a four-bedroom, one-bathroom brick
have had the time to consider whether their dwelling dwelling with a dated interior in fair condition
really suits their current way of living, be it working overall. A property prime for renovation, it sold in
from home, home schooling or just spending more May for $783,000.
time indoors with the entire family. The question has 2345637891094792637 436943649
been whether to renovate or move.
Property 3 is a similar aged five-bedroom, three-
For many people, it’s a no brainer; being locked
bathroom dwelling on a similar parcel of land. This
up in a small unit dreaming of a backyard and a
sold in June for $1.009 million.
dedicated study room, this crowd will be drawn to
buying a dwelling that will suit their needs. This shows a difference of $226,000 from the
dated four-bedroom dwelling which might yield
The other camp is the established homeowner
more profit than just updating the existing
who does not want to move given the proximity
dwelling. The addition of an extra bedroom and two
to services, schools and family and is willing to
bathrooms on top of a full renovation elevates this
complete a renovation to get the house exactly how
property into a new class as buyers and valuers
they need it for now and into the future. They might 2345637891094792637 4369236639
alike are comparing this property to other five-
now require a dedicated home office, kids’ study
bedroom house sales around.
area, an extra living room or another bathroom.
This example of three dwellings in South Penrith highlights the importance of knowing
your market to ensure you get the best possible return.
6
Month in Review
Costs and building time frames are definitely increasing, August 2021
particularly in this space where private builders are competing
against larger project home companies for materials and labour.
renovate than sell and upsize. The strengthening floorplan, thus providing new bathroom, living
market and rise in values in the past 12 months areas, kitchen, laundry and deck. This sold in
can mainly be attributed to the competition for excess of $1.4 million in July 2021. Comparable
listings from Sydney based buyers moving to the circa 1960s three-bedroom, one-bathroom
region. This has resulted in existing residents dwellings pre-renovation are exchanging in this
2345637891094792637 436943649 finding it difficult to upsize in their own village, immediate location in the high $800,000s to mid
therefore many are choosing to extend and $900,000s at the moment, further underpinning
Given the large amount of new construction around renovate. By doing this, children are able to stay the feasibility of renovating rather than selling
the Western Sydney growth precincts, the in the same school and school catchments and and upsizing.
availability of quality tradespeople is limited as they existing proximity to services, transport and
are held up on larger job sites. amenities is maintained without the requirement
to compete in such a strong and tightly held
In addition, the pandemic has impacted the supply
RESIDENTIAL
marketplace.
of materials into Australia, resulting in higher prices
for raw materials being pushed onto the consumer. Costs and building time frames are definitely
increasing, particularly in this space where private
Given the higher costs now associated with
builders are competing against larger project home
renovating, renovators should ensure they analyse
companies for materials and labour. This, however,
currently renovated properties that have sold to
has yet to slow down the rate at which renovation
ensure they are not overcapitalising. This is of most
projects are occurring. The Blue Mountains region
concern to investors and house flippers as it is
is notoriously expensive for construction works
dead money that could have been used elsewhere. 234567568931030 03893
given bushfire and other council regulations
For owner-occupiers, this is less important as any
even in more normal times. Given these projects
overcapitalisation should be absorbed over time as
are being undertaken by medium to long term
the market improves.
residents, these challenges are well known in the
Blue Mountains marketplace and are less of a deterrent than in
The Blue Mountains has experienced a strong other geographical locations within the wider
increase in the number of renovation projects metropolitan Sydney area.
over the past 12 months. Initially fueled by the
An example is a project undertaken in Blaxland,
New South Wales home builder grant scheme,
where the owner acquired the circa 1960s
the tightly held market conditions are now
dwelling in early 2016 for $490,000. The home
resulting in an increase in renovation projects.
was extended and renovated in 2020 from
Put simply, there are very limited numbers of
its traditional three-bedroom, one-bathroom 234567568931036 03893
property on the market and it has become easier
floorplan to a four-bedroom, two-bathroom
and often cheaper for owners to extend or
7
South-Western Sydney independent building quotes from reputable February 2020 for $1.94 million, subsequently Month in Review
Renovation activity in the south-western property builders. underwent a cosmetic renovation and resold in August 2021
market has been on the up in the past 12 months. March 2021 for an incredible $3.15 million.
Overcapitalisation is a larger concern for investors
However compared to other Sydney markets, the
than owner-occupiers who are generally committed
relatively low price points generally will see owners
to the property for the long term, so any potential
upsize to a larger modern home in one of the many
overcapitalisation could be overshadowed by
new estates rather than undertake substantial
the increased amenity of the dwelling and any
renovations.
shortfalls should be absorbed in the medium to
Whilst moving to a larger more modern house long term with property growth.
seems to be a favourable option, there are still
Northern Beaches
many reasons that owners and investors choose to
Record low interest rates, a booming residential
undertake renovations.
market and government incentives have created 234567899416007946608840860 8604186084
COVID restrictions have played a big part. With a strong opportunity for renovations across the
people finding themselves more confined to their board. ABS reported that lending for new home
homes, they are finding they have more time building hit a record high in November 2020 and
and money to start a project that has been in the home renovation-related lending was up 47.4 per
pipeline for many years. From painting the kids’ cent in January 2021 compared to the same time
RESIDENTIAL
bedrooms to installing a pool, these projects are last year. Add the 120,000 HomeBuilder grant
coming in all sizes and budgets. applications and this all underlines how strong
and active the renovation sector is at the moment
The south-west is a popular family market, so when
(domain.com.au).
the dwelling no longer meets the needs of the
occupants, instead of uplifting and moving which Renovating is a very popular option on the
people can find to be an inconvenience, owners are Northern Beaches, as families would prefer to
instead extending homes, be it in the traditional remain in their established communities but may 23456789941600794660884906 860418608
sense of a first-floor extension or a secondary living have outgrown their existing homes. The strong
space such as a granny flat. housing market has also made buying and selling
Our top tips for potential renovators include:
competitive, difficult and expensive.
Investors on the other hand are looking to attract a
◗ Look into a complying development application
higher rent (or second rent if adding a granny flat) Flipping houses is relatively popular and
as opposed to a council DA – this can save you
or to add value to their property for a sale. professionals who bought prior to 2021 would have
both time and money in the approval process.
had strong success selling in the current market.
Before embarking on any substantial renovation
We have noticed the resounding strength in the ◗ Keep it simple, limit unnecessary works
project, ask yourself what your goal is. Are you
entry- level market has closed the gap and margin (particularly works that aren’t visual to buyers)
committing long term to the house or are you
levels between renovated properties. We would be and create a property that will appeal strongly to
looking for a quick uplift in value to sell the
mindful of factoring in similar growth expectations the owner-occupier market.
property? This will help set the bar on how big
and creating a profitable level of capital.
and costly the renovations will be. Do your market ◗ Ensure you have strong market knowledge and
research to ensure you are not overcapitalising A notable success story is 21 Arnott Crescent, have benchmarked the property you are looking
as this is dead money and obtain at least three Warriewood. The property originally sold in to create against recent sales in the area.
8
North Shore value through completion of these works.As an witnessed by valuers working in the area sighting Month in Review
As with most areas across Sydney, the North Shore example of this, a property on Mosman’s Balmoral building tenders for the purpose of on completion August 2021
market has benefited from very strong recent Slopes was purchased in 2015 for $5.85 million valuation assessments.
growth over the past 12 months. Although this has and underwent a full, high quality renovation.
Southern Sydney
been welcome news for property owners in these This property recently re-sold for $13 million
Based on conversations with our valuers on the
areas, it does have the consequential effect of (domain.com.au). Obviously there has been very
ground in this region, it appears that renovations
raising the transactional costs of a possible move strong market growth during this period, but the
have slowed down slightly in recent months,
for owners wanting to remain in the area.The old renovations have certainly contributed significantly
particularly due to the most recent lockdown
adage of buying and selling in the same market to this recent sale result.
restrictions from July.
rings true at the current time, with constantly
reported record sales prices flooding your letterbox The government’s introduction of various stimulus
from local selling agents. and home building grants spurred owners
to renovate, although as stated above, there
This, in conjunction with a lack of supply and
surprisingly hasn’t been as much renovation work
purchasers’ fear of missing out, has made the
happening in more recent months. The local market
concept of a possible move risky and unappealing.
is more geared towards the construction of new
Therefore, many homeowners have decided to
homes at a higher scale, build cost or level of finish.
improve their current homes through renovation
The other obvious reason for this slowdown is due
RESIDENTIAL
and extension projects. Renovation activity on the
to recent lockdowns and uncertainty.Property
North Shore appears to be very strong, with both
prices have increased significantly in a short
large scale and smaller projects currently being 23456778910760 760976079 period of time; as such it is likely that many new
undertaken.
purchasers have exhausted their funds in acquiring
The high-end prestige market on the North the property.
Shore has led the way with market growth over
Most renovations appear to be carried out on
recent months and this sector appears to be
owner-occupied properties. Whilst this can be
leading the way with spending on renovations.
attributed to a number of reasons, the major
It was recently reported via domain.com.au that
catalyst appears to be the fact that people
the affluent suburb of Mosman, on Sydney’s
are spending more time at home, particularly
Lower North Shore, had the greatest amount
working or studying. With the strong market
of spending on renovations for any suburb in
growth in the past 12 months, many owners have
Australia at approximately $87.2 million over
advised us they believe it is cheaper and less
the past 12 months.Also on the Lower North
stressful to renovate their existing home rather
Shore, the suburbs of Willoughby, Castle Cove 23456778931406
760976079 than go through the process of selling and then
and Northbridge combined spent $56 million on
purchasing a completed home.
renovations over the past 12 months, the second
High activity in renovation projects on the North
highest figure for suburbs in New South Wales. Renovations can still be profitable however it is
Shore has now led to increased waiting times for
important that people conduct their due diligence
Although the majority of these renovation projects contractors to undertake these works. This supply
and extensive research before carrying out these
are likely for personal upgrading purposes, and demand imbalance will of course lead to
projects. It is also important to remember that
there is certainly potential for significant added increased building costs and this has already been
the property market can change in a relatively
9
short period of time so this must be factored into Month in Review
decisions. August 2021
Older properties with enough land for
alterations and additions or potential granny flat
developments tend to be most suited to renovation
projects. These properties however attract a
premium price for this reason. We have also seen
a notable price difference between original and
renovated villas or townhouses.
Our top tips for renovators: 234567891095005759570 9059095 2345678910970107791 91710097
◗ Buy property at entry level price points and in
original condition, preferably in a good location. Inner West
Renovations have been at a steady rate across
◗ Compare the market between original products
the inner west over the course of 2021. From our
and recent sales evidence for renovated
conversations with builders and homeowners,
property.
construction times are being delayed due to the
RESIDENTIAL
◗ Shop around for many quotes and prices to COVID-19 pandemic, as delays on materials are
renovate. becoming an issue for a majority of renovations.
◗ Run your numbers to determine if your Generally from our experiences, many homeowners
investment is feasible. feel that given the low interest rate environment
and restrictions on travel, they have the time and
143 Napoleon Street, Sans Souci sold in March
money to complete a renovation to their family 2345678910970107701 91710097
2019 for $968,000 and was extensively
home. In saying this, there have also been examples
renovated before recently selling in May 2021 for
of properties being renovated to generate a profit We have also observed that properties ripe for
$1.901 million.
and these have generally resulted in a strong profit renovation, particularly freestanding or semi-
given the rampant pace of the market in the inner detached dwellings in good locations, are being
west over the course of the past nine to 12 months. snapped up by savvy builders looking to complete
a small project which will enable them to flip it
An example is a townhouse at 1/360 Norton Street,
for a profit while the market is still strong. The
Lilyfield which sold for $1.335 million in December
prices being paid for these properties requiring
2020, renovated and then resold for $1.89 million in
renovation are considerably higher than what they
June 2021.
were six to 12 months ago and there is the risk
Many homeowners feel that given the low interest rate
2345678910950057595090 9059095 environment and restrictions on travel, they have the time and
money to complete a renovation to their family home.
10that if market conditions softened or if renovation with superior two-bedroom accommodation and dwelling with a single car space. In March, 31 Surrey Month in Review
costs were to blow out, it would quickly eat into any parking, however this property sold for slightly less Street sold for $2.65 milliion, being a tired three- August 2021
potential profit margins. in February 2021 at $1.6 million. bedroom, one-bathroom terrace with two car
spaces. Elsewhere in the suburb, 238 Liverpool
26 Eton Street, Camperdown (below) sold in May Inner Sydney
Street, an un-livable three-bedroom, two-bathroom
2021 for $1.62 million at auction with multiple Renovation activity within inner city Sydney
blank canvas terrace sold for $1.808 million at
registered bidders. Our conversations with the has been strong in recent times. Due to the
auction in March, although situated on a slightly
selling agent indicate that most bidders were established nature of the area, there are many
smaller allotment.
builders looking to renovate and resell for a profit. older style dwellings which require updating
The property is currently uninhabitable and to bring them in line with modern lifestyle and
requires a complete renovation. The property is market expectations, whether this be attic
small and comprises only one bedroom and there is conversions in terrace dwellings, ensuite additions
currently no parking. or extensive re-build work.
Renovations have always been popular in inner city
Sydney and this has not changed in recent times.
The pandemic has altered the way people use their
homes, with many people realising they need more
space and deciding to extend.
RESIDENTIAL
With the majority of inner-city houses comprising 22345667834967791306569 45673673
terrace dwellings, renovations are widespread as
these (often 100-plus years old) properties require
maintenance and modernisation.
2345678496100640178 9710471074
Renovations in the inner city are costly, with
basic additions and renovations often starting at
$400,000 and significantly increasing from there.
The reason for this is that access and parking is
often restricted and single-fronted attached terrace
properties (with a frontage of circa five metres
wide) sometimes having no side or rear access,
meaning that all materials must enter the site
through the front door! Furthermore, structural 22345667834967791306569 45673673
work on attached dwellings must be treated with
care so as not to disturb neighbouring properties.
Renovations are feasible for all price points and
As a result of the high cost of works, a premium locations in the inner city due to the almost non-
2345678496100640178 9710471074
is often attached to renovated dwellings within existent supply of new properties. Due to the cost
the inner city. In February, 33 Surrey Street, of materials and labour, care should be taken with
Darlinghurst, sold for $3.25 million, being a fully regard to cost as overcapitalisation can be a very
The previous property to sell on the street was
renovated four-bedroom, two-bathroom terrace real risk in these areas.
a superior updated dwelling at 8 Eton Street
11Significant renovations and additions are largely Renovations can range from small end projects, significantly enhance the livability and value of Month in Review
confined to homeowners due to the cost of such as painting or new flooring, up to high their property. August 2021
completing such work. Investors are more likely scale extensions and renovations with very high
A unit opposite Coogee Beach at 14/230 Arden
to complete more cost-effective updates such as quality finishes. An example of the latter was
Street sold in June for $3 million. The top floor,
paint, floor covering or kitchen updates and carry highlighted in the sale in June of a Tamarama
three-bedroom, one-bathroom Art Deco unit had
out structural works and additions far less often. home which had undergone a significant recent
undergone a complete internal renovation after
renovation including a new swimming pool. The
Flipping is not a concept that is overly profitable previously being purchased in dated condition for
property achieved a result of over $7 million, after
in the inner city. This is due to the high cost of $2.26 million in September 2016.
previously selling unrenovated in November 2012
entering the market, with stamp duty and capital
for $2.3 million.
gains taxes eating into gross profits to such a point
that it is rarely feasible. As mentioned previously,
the high cost of completing such works further
squeezes the profit margin.
Our top tips for renovators in the inner Sydney
area include: adding parking where possible;
adding a second full bathroom to terrace houses;
and simple landscaping – terrace houses don’t have
RESIDENTIAL
much outdoor area at the best of times, so make
what is there usable with simple, soft landscaping 234567891081881 1818
or decking.
2345676867649180014567686764080 9804804
Eastern Suburbs
The eastern suburbs is an established region
of Sydney where renovations and extensions
are far more prevalent than new builds. Whilst
many properties in this region were above the
value threshold for the HomeBuilder grant, this
hasn’t stopped the renovation boom in this part
of Sydney. Over the past 12 months it would be
difficult to find too many streets in the eastern
suburbs without scaffolding up on at least one
house or unit complex. 234567891081881 1818
With lifestyles and spending habits thrown upside 23456768676491800145676867646108
9804804
down in the past 18 months (and for the foreseeable The other consideration for unit owners is the
future), property owners not only found themselves common parts of the building. Older buildings can
Whilst most people think of houses when
working more from home, but also holidaying more see a significant uplift in value from works such
discussing renovations, in an area like the eastern
at home, with overseas trips a distant memory. This as the building façade, entry foyer and staircase
suburbs, with unit buildings dating back over 100
has resulted in additional time and financial means and landscaping. Some complexes with small or
years, there are opportunities for unit owners to
to get that long planned renovation underway. no balconies have also used the opportunity of
12a building refurbishment to add larger and more floor space and carrying out an internal refurb instances, are still above the expected price for Month in Review
usable balconies which greatly increases the which resulted in a dual occupancy. So, not only do an established older home. The established house August 2021
marketability of these units. Of course, getting they have a place to call home, but also additional provides the opportunity for the owner to put
these works up and running will also depend on accommodation that can be rented from $450 to their stamp of identity on the renovation project
the willingness and financial capacity of other unit $500 per week plus in a tight rental market. whereas a house and land package is simply what
holders within the complex and often leads to these you see is what you get-any subtle changes to the
A lot can be achieved with a budget of less than
projects being delayed or abandoned all together. design could see a significantly increased potential
$75,000 for an updated kitchen, bathroom, ensuite,
Shaun Thomas sale price for the established home.
general painting and floor covering, although, we
Director
do stress that costs have been rising in the past 18 In summary, well priced and thought-out renovation
months and tradies are becoming a rarefied species projects for profit are a very feasible option in the
Lismore/Casino/Kyogle to locate given the plethora of building work current market for Lismore City, Casino and Kyogle. If
The lure or even the thought of a renovation
available to them. not selling, then the uptick in the rental level resulting
project can be rather daunting and, unfortunately,
from the renovation project is also a bonus.
sometimes expensive (if not done well or not Provided the renovation work is emphasising the
judiciously vetted). more positive features already there or introducing Vaughan Bell
Property Valuer
new features that buyers desire (do your homework
Rather than fork out significant dollars to acquire
for the areas you wish to invest or live in as each
land and build new where the total cost could easily Ballina Shire
locality is different), then the cost spent should
RESIDENTIAL
exceed $550,000 within the newer residential The COVID pandemic appears to be becoming
translate to some appreciable capital gain in the
estates of Goonellabah or circa $450,000 plus in more of an issue when it comes to free travel
current market.
Casino or Kyogle, the alternative of acquiring an around all states. The impact on the local housing
established dwelling and completing a full or even However, the trick is not to overcapitalise. A good market around the coastal areas of Lennox Head
partial renovation at a considerably lower cost option is to seek out a large home with only two to Evans Head is yet to be fully realised and with
compared to a new build is proving to be attractive. bedrooms but a large living space. Cut the living the border to Queensland being restricted yet
room to provide a third bedroom and the rental again, the impact could again make the market go
With interest rates now at record low levels,
would naturally improve to reflect that of a three- either way. There is currently still a very strong
i.e. below two per cent, there are a number of
bedroom home. demand for properties which in turn has continued
opportunities that could potentially feature in the
to leave agents with a limited supply of properties
minds of investors, developers, first home buyers From a conservative perspective, the purchase
for sale, however agents are reporting a slowing in
and upgraders. Cost is naturally going to be the key of an established house with opportunities to
enquiries for higher value houses. Whilst demand
ingredient in decision making and the resultant end renovate would be a more viable option and
resulting from the capital city markets has typically
value of the final product. purposeful stepping-stone to something brand new
been concentrated in the more desirable areas
in the future without the millstone of a large debt
For example, a large, tired, circa 1980s brick and of Byron Bay and surrounding localities, in more
around the neck.
tile residence in Goonellabah was acquired by a recent times potential purchasers have expanded
young enterprising couple (first home buyers) There are land and house packages available their searches into the desirable areas of the
who saw the potential in exploiting the excess today which are competitively priced but, in most Ballina Shire, most notably Lennox Head, Skennars
With interest rates now at record low levels, i.e. below two per cent, there are a number of opportunities
that could potentially feature in the minds of investors, developers, first home buyers and upgraders.
13Head and East Ballina, as well as the rural localities Month in Review
of Newrybar, Brooklet, Fernleigh and Tintenbar.
It comes down to the owners exercising sound judgement and not August 2021
just being one of the sheep and following the herd.
The flow on effect of the higher prices has now
left people in the rental market in a bad situation.
stay put rather than go for an upgrade. Perhaps it is if you are willing to run that risk and
The higher rental prices being asked in these
accept some downside later on at the point of sale.
small coastal towns is causing many businesses The Byron Shire has seen its fair share of
to struggle to find employees willing to work for renovation projects in the past 12 to 18 months. Like all things in life, it’s a matter of choice and
minimum wage. The demographic shift which These have ranged from an updated kitchen or achieving balance.
has occurred on the North Coast due to prices bathroom to almost full rebuilds. In addition, there Mark Lakey
continues with many of the younger generation are the swimming pools and numerous studios and Property Valuer
having to relocate to inland areas due to significant granny flats for extended families or extra income
increases in both property values and rental prices. as well as the alfresco add-ons (or patio, for those Clarence Valley
Bernard Walter of us born before 1980). Across the Clarence, the construction industry
Property Valuer continues to power ahead - new builds, renovations,
Making the most of a renovation budget in the
extensions, pools, sheds and more! Amid the world
Byron Shire is a matter of reading the market to
Byron struggling against the ramifications of COVID and
some extent such as understanding what buyers
To renovate or not has always been a topic of endeavouring to settle into a new normal, people
are looking for and what styles are on trend, but
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discussion around the barbeque or water cooler are valuing home more than ever, so why not make
also to consider the merits of what needs to be
and the spike in property values brought on by it nice.
done on individual houses or units. Some properties
COVID-19-related migration to the Northern Rivers
could do with a reconfiguring of their floor plans to Renovations seem to be occurring all over the
has added a fresh dynamic to the debate in the
improve flow, while others may be crying out for a region, however given the older nature of more
Byron Shire.
new kitchen or an extra bedroom. It comes down character homes in Grafton and Maclean, these
The choice to renovate or relocate is balanced by to the owners exercising sound judgement and not locations are particularly busy. Also, the lower
the underlying supply and demand of property just being one of the sheep and following the herd. median price of $365,000 is appealing in the
in the area. In some circumstances in the past, it Grafton area for instance.
Additionally, whether to renovate or not, or more
was debatable whether it was better to spend big
importantly, what to renovate and how much This renovator momentum seems driven by low
on a renovation project or to purchase an already
to spend, will vary as to whether or not you are interest rates and the desire to live and work close
updated house. However, in the current tightening
renovating an investment property or an owner- to or from home and of course the decentralisation
market where house and unit prices have reached
occupied property. of the broader population.
all-time highs with little or no available stock, the
option to renovate an existing dwelling compared If renovating an investment property, the budget While of course there are challenges, the upmost
to relocating is becoming more viable and in some is far more important as the money spent must challenge appears to be the age-old tug of war
cases, necessary. In the current market, many be justified by the increase in value and rental between supply and demand. With such an increase
homeowners who purchased before the current income achieved. However, if renovating an owner- in new builds as well as renovation works, wait
boom are in the enviable position of having large occupied property, there is the added dynamic times are noticeably increasing.
amounts of equity in their properties and a low of lifestyle. After all, a house is to be lived in and
In terms of attached housing, the median unit price
interest rate environment. This has opened up enjoyed as well as being an investment, so is it okay
in Yamba has increased almost $100,000 over the
a range of value adding renovation projects and to be a little extravagant with a fancy kitchen or
previous twelve months, that is, approximately 20
lifestyle options for homeowners who choose to luxury ensuite and run the risk of over-capitalising?
14per cent. Whilst certainly renovations are occurring, The problem with this in regional locations such These are the negatives of the current COVID Month in Review
often at these inflating prices, we are noticing as Coffs Harbour is the shortage of builders and market with regard to renovation.On the positive August 2021
renovations being put on hold or undertaken on a tradies to undertake this work.We are hearing side, the risk of over-capitalising is very low. As
smaller scale. stories of up to two year wait times for some prices rise, it is the underlying land value which
builders and landowners who cannot get new increases. Yes, build costs have risen but when we
Across the entire region, the Clarence Valley is
homes constructed. are talking 30 per cent market value increases in
seeing a healthy period of rejuvenation.
12 months, it is the land which absorbs these value
We are also seeing an increase in cost plus contracts
Caitlin Davies increases.
Property Valuer as opposed to a fixed price building contract which
is most commonly used. As material prices rise There is no particular type of property which is
sharply due to market pressures, builders are being renovated, rather the whole gamut. We seem
Coffs Harbour finding their profit margin diminishing. Typically to have an insatiable appetite for improving our
To renovate or not to renovate, that is the question.
by the time a fixed price contract is quoted and homes which may reflect the increased time we are
Going by the amount of activity in Coffs Harbour,
signed, it may be six to nine months or longer before now spending in them.
I think the answer is renovate at all costs. We
the build starts, especially if council approval is Grant Oxenford
have seen a significant uptick in renovation works
required. Over this period, material prices increase Property Valuer
since the onset of COVID and the government
which is borne by the builder under a normal
incentive package aimed at the construction
fixed price contract. If the builder has multiple Newcastle
industry. Anyone who was thinking about that
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constructions on the go, this becomes an issue. Home renovations may be the most romanticised
major extension, renovation or new build for that
aspect of owning or buying a home. The thought
matter has jumped on the bandwagon. The result To overcome this, the builder has two options: build
of buying a neglected home and restoring it to
is that construction cost and time have increased a clause into the fixed price contract passing on any
its former glory and selling it to a nice family is
considerably and there is a shortage of materials material price increases; or go to a more flexible
almost a staple of Australian culture. The reality of
countrywide. These factors, in my opinion, have cost plus contract. The problem we often encounter
renovations is much more complex. Aspects such
outweighed the $15,000 incentive currently being with the cost plus type of contract is that there is no
as who is renovating, where you are renovating and
offered by the government. To that effect, from finish line.Although a building estimate is generally
the availability of trades and materials can dictate
personal experience, these incentive packages provided, it is a variable beast and in our experience
whether renovating is feasible or not.
have benefited owners who had already started rarely comes in on budget. Again the problem from
or were well into the building process rather than a valuation point of view for mortgage security In terms of renovation activity in the Hunter region,
increasing new builds or renovations. The explosion purposes is that without a definitive cost base and it is best to look through two lenses: costs of
in renovations has been driven by the increasing progress payment schedule, it is problematic to: a) purchasing and costs of the works to be completed.
equity in property values and cheap cost of money assess the value as if complete; and b) undertake In speaking with building companies, especially
coupled with the fact that most of us are now not progress inspections with the cost of work varying those who specialize in renovations, the general
spending money travelling but instead are investing mid-build, including possible additional cost consensus has been that owner-occupiers dominate
in our homes to enhance our lifestyles. associated with quantity surveyor reports. the majority of their work. The biggest players
are families with young children looking to expand
to a bigger home to accommodate their growing
We seem to have an insatiable appetite for improving our family. As local agents have expressed, instead of
homes which may reflect the increased time we are now fighting it out in a hot market, they can extend their
current home in the area they like for the same
spending in them. total amount as buying a larger dwelling. Younger
15this with an understanding of construction costs, Month in Review
Areas such as Islington, Tighes Hill, Georgetown and Mayfield availability of materials and trades and the wait August 2021
which have seen land values soar are becoming hot spots for times for your area will give you a great head start
in ensuring you don’t over-capitalize or price your
renovation and extensions. property out of the market.
buyers who have been priced out of the market are renovations as they are working on maximising Tom Mc Douall
Property Valuer
opting to build further out in areas such as Fletcher the return on investment. Spending $150,000 to
and Marks Point. $200,000 on turning a three-bed, one-bath into
Central Coast
a four-bed, two-bath for an additional $100 to
Location is also playing a large role. Areas such In the midst of the Central Coast market
$150 a week in rent isn’t feasible but an owner-
as Islington, Tighes Hill, Georgetown and Mayfield experiencing unprecedented growth, many
occupier doing the same investment could result in
which have seen land values soar are becoming property owners are deciding what to do next.
significant capital gains long term.
hot spots for renovation and extensions. Some recurring questions raised recently include:
Homeowners looking to downsize are cashing In relation to the unit market, major renovations Should we sell? Can we buy back in? Should we rent
in on high prices, selling and moving to low are not a wise option. With constant new supply of after selling? Would it be a good idea to renovate
maintenance townhouses or units. This is freeing units, the market will simply pick the new unit over our existing property?
up stock in premium locations where buyers are the renovated older unit. The best strategy would
These are the typical questions we receive when
attempting to capitalize on older dwellings and be a cost-effective refresh renovation to ensure
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the market is on an upward trajectory. Commonly,
retrofit them with modern finishes and additional the condition is at its comparative best. This won’t
the answers remain inconclusive with balanced
rooms. Builders have mentioned prices upwards increase rental income significantly, but it will avoid
arguments for and against.
of $300,000 worth of renovations. There has a rental reduction caused by competing with the
also been an increase in Sydney buyers snapping brand-new units. For seasoned renovators on the Central Coast,
up premium coastal locations and either doing it is well known that qualified tradesmen are in
There are pitfalls that potential renovators are
major renovations on 1990s and newer homes or short supply. Calls generally made to numbers
coming up against. With a huge demand for
knocking down older homes and rebuilding. This is on fridge magnets or contacts on Hi Pages ring
renovations and building in general sparked by
a focus on long term capital growth as opposed to out unanswered for many. More often than not,
low interest rates, an influx of Sydney buyers, and
turning a profit. it comes down to who you know to get trades to
building grants, pressure on the supply chain for
knock on your front door – that is, if you have
Price unsurprisingly plays the final role in these companies has also increased. Builders are
one, depending on the scope of building works
renovating feasibility. Buying at a premium in seeing wait times of several weeks for roofing
required. Whether it be for a small internal
a hot market and then sinking further funds materials and timber, and price of materials
renovation, proposed additions or a completely
into renovations can be risky. It is important to increases as well. In addition, companies without in-
new build, it can be quite a stressful time for
understand the market limits of your location. The house trades are struggling to secure them at the
property owners new to renovating or building for
market may not receive the changes you will make capacity required. This is pushing completion dates
the very first time.
with renovations. If you are buying near the top into next year and costs higher than expected.
of the market and then decide to renovate, your Since the emergence of COVID, the government
With large amounts of renovation activity in the
return on investment will be severely reduced as reacted to the economic challenges and introduced
Hunter area, those looking to renovate need to
the market won’t pay for those improvements. the Home Builder grant scheme, allowing property
have a clear plan. Do your research and understand
The type of renovations is a key choice. Investors owners to apply for a government grant to assist
that your market characteristics will dictate the
of both dwellings and units tend to make cosmetic in building a new home or completing a substantial
type, amount and feasibility of renovations. Pairing
16renovation. When the policy was reviewed, the emerging suburbs such as Woongarrah, Wadalba Month in Review
federal government decided to extend HomeBuilder and the to be created Crangan Bay. The price point August 2021
to 31 March 2021. The HomeBuilder scheme to purchase land and build a project style home
provides a $15,000 grant for eligible contracts attracts the first home buyer and investor markets,
entered into on or after 1 January 2021 until 31 with reliable long-term returns. A house and
March 2021. Although the scheme has now expired, land package in these areas usually starts in the
construction projects that benefited from the grant $600,000 to $700,000 price range.
are currently in progress across the region. It must
Recently some property owners have been
be mentioned that at the time of writing, a pause on
opportunistic and have cashed in on the current
all residential construction was currently in place
market conditions. The sale of a circa 1978 villa at
as part of the New South Wales government public
1/4 Ocean Beach Road, Woy Woy is an example of 2345678915089759555088 7855995
health order, with the effects on the local industry
a successful property flip. Purchased in January
as a whole currently unknown.
2021 for $380,000, an internal renovation was
Discussions with local builders on the Central completed before being resold in May 2021 for
Coast confirm that the waiting time for building $575,000, a 51.32 per cent ($195,000) increase
materials such as timber used for framework has in value.
been on the rise, steadily increasing throughout
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2021 due to supply issues globally. Property
owners who have received building quotes for
proposed renovations or new builds and delayed
signing their contracts have experienced cost
increases. These increases generally are absorbed
by the owners with no added value realised 23456789150897595558 7855995
due to cost escalations. This makes the risk of
overcapitalising even greater if the appropriate
Although an outstanding result was achieved
market research has not been undertaken prior to
by the vendor, it is worth mentioning that
the commencement of building works.
2345678915089759555088 7855995
there is always a level of risk when undertaking
Geographically, the southern end of the Central similar projects with market conditions heavily
Coast has a very limited supply of vacant land. influencing the end sale price.Opportunities like
Suburbs such as Umina Beach, Woy Woy and this could be short lived as we move closer to
Ettalong Beach are steadily being transformed with the peak of the market. Although strong market
original 1950s to 1960s cottages being extended conditions are still being experienced, there
and renovated or knocked down for new dwellings is evidence emerging in the marketplace that
to take their place. In some cases, depending on the recently renovated properties are being listed
zoning, properties are being further developed into for longer with vendor expectations exceeding
small villa or townhouse developments. current market values and real estate agents
recording price adjustments to marketing
If we travel to the northern end, the geographical
campaigns before an offer is accepted. This
dynamics shift with vacant land readily available in 23456789150897595558 7855995
can be viewed that we are possibly nearing the
17top of the property market cycle. If this is the dwelling at around the low to mid $700,000s. Month in Review
case then property owners who are thinking of August 2021
With further government incentives unlikely for
renovating and selling in the near future should
residential development, rising construction
be cautious and undertake the necessary
costs and uncertainty creeping back into the
research prior to commencement of works.
market due to recent COVID-19 lockdowns, many
Another example of a successful renovation property owners and investors in the region
project is 11 Haynes Street, Wyoming. The 1980s will have questions that cannot be conclusively
brick and tile house was purchased in original answered. Our advice would be to proceed with
condition in May 2020 for $540,000 and after caution and ensure the appropriate research and
extensive external and internal renovations, due diligence is undertaken prior to completing
the property was then resold in May 2021 223456789310880367388 18335053 renovations or purchasing a property on the
for $865,000. This shows a 60.19 per cent Central Coast.
($325,000) increase in value. Todd Beckman, Julia Miller and Jemma Briscoe
Valuers
Illawarra
Apart from a pause during July due to COVID
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restrictions, renovation projects in the Illawarra
have been plentiful. It seems that halfway through
2020, with travel restrictions, homebuilder grants
and cash injections, people decided to renovate.
Some have been small reconfigurations or
223456789310880367308 18335053
updates, others have been large whole of home
rebuilds. Builders and tradies have been very
223456789310880367388 18335053 busy in the past year trying to keep up with the
Although we are seeing many renovation projects
extra demand. One homeowner I met recently
across the region, dual occupancy development
advised that they have taken to YouTube to learn
appears to be the development of choice for local
how to lay pavers as they weren’t getting return
investors. Where cricket was played by kids in
calls from tradespeople.
the backyards of their parents’ home is now the
prime location for secondary dwellings. Detached The majority of projects are completed by owner-
dual occupancy properties can now be found occupiers for their own benefit. Either they need
in many areas across the region with reliable more room for their growing family or they’re a bit
yields wherever you look. Price points do differ, older and finally have the savings to afford their
with dual occupancy properties in the southern dream house. They’ve either recently bought an
end of the region such as Umina Beach and older house and immediately renovate, or they’ve
Ettalong Beach selling for $800,000 and above. lived in the same property for a number of years
223456789310880367308 18335053 To the north in areas of San Remo, Charmhaven and it’s now time to complete their upgrade.
and Gorokan you can secure a dual occupancy
There are also renovators for profit – buyers out
property with a recently constructed secondary
18there looking for a bargain that they can put afford to purchase at this stage due to the booming of Sydney enquiries looking within the region to Month in Review
their skills into to renew the property and resell market conditions in the Shoalhaven region. relocate, but who generally prefer to be within August 2021
it. Typically, the idea is to hold the property for walking distance of local cafes and amenities.
The main concern hindering the increase in
as short a time as possible so usually this means Notable examples include homes on Retford
renovations and construction of new dwellings is
staying away from an extension that would trigger Road, which had been purchased in the $500,000
the lack of supply of some building materials such
a DA. In Figtree, a property on Murray Park Road range in 2019 and then tastefully renovated,
as timber in recent months. This has resulted in
sold for $675,000 in February 2020 as a rundown resulting in over 100 per cent gains. Other notable
construction costs increasing significantly. The lack
mortgagee sale. The purchasers completed a full strong achieving suburbs have included the
of timber has been caused by, in part, the south
renovation and tidy up of the property and it resold highly desirable suburbs of Burrawang, Exeter
coast bushfire event of 2019 and the COVID-19
for $1.15 million in March 2021. and Burradoo. These suburbs typically demand
pandemic. This perfect storm has increased the
Chris McKenna a strong price point and Burradoo has long since
cost of timber in the region by as much as 20 per
Region Director been a favourite of Sydney families, who are able to
cent according to local builders. Local builders
upsize their homes and downsize their mortgages.
are also noting problems sourcing timber which is
Nowra / Shoalhaven Good quality renovations in Burradoo have always
delaying renovation and construction productivity.
Overall, renovation activity in the Shoalhaven was commanded a premium price due to a lack of new
very strong up until July of this year. Joshua Devitt product available within the suburb. This in turn
Director Valuer
results in most prospective purchasers looking
The increase in renovations around the region is
at housing within the suburb, prepared to pay a
RESIDENTIAL
largely in part due to the incentives offered by the Southern Highlands premium for a high-quality product, completed to
Home Builder Grant. This grant provides eligible 2021 continues to see strong prices achieved in the
replicate a near new home.
owner-occupiers (including first home buyers) with Southern Highlands region, with new records being
a grant to build a new home, substantially renovate set week after week. The demand for new product The ongoing surge in residential housing prices
an existing home or buy an off the plan home or across the three big residential developments of in the region coupled with an increase in cost of
new home (Revenue NSW). Many homeowners are Renwick, Darraby and Retford Park have been no materials and demand for tradespersons within
advising they either like where they live or can’t stranger to this continued price growth, which has the area is beginning to put pressure on the overall
afford to purchase elsewhere, so they have decided resulted in investors and homeowners snapping feasibility of renovating homes for profit. However
to use the grant to complete a renovation and up older style dwellings in older more central there are always exceptions and these would
upgrade their existing dwelling to make room for pockets of Bowral, Mittagong and Moss Vale include long held assets which have enjoyed a
the whole family. and committing to major renovation works in an significant capital gain over many years. The other
attempt to attract top dollar. main exception is tradespersons or professional
We are also seeing an increase in the number of
contractors who have the skillset and local trade
granny flats being built and duplexes where people The biggest uptick in this style of renovation
connections to complete these types of works by
can earn an additional income by renting out one has been notable within the central Bowral area,
forgoing builders’ margins and obtain the best
or both these areas. An additional living area can particularly between the hospital and Old South
possible returns.
also provide a space for family members who can’t Road. This has likely been the result of high levels
Kurt Bismire
Valuer
We are also seeing an increase in the number of granny flats Albury
being built and duplexes where people can earn an additional The prominent drivers for renovation in the
income by renting out one or both these areas. Albury-Wodonga region are investors capitalising
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