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Residential

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OverviewMany dream of renovation success but not all are capable of picking the best project in the right location. The key, as always, is good market intel in order to avoid those suburbs where overcapitalisation is easy.

This month, our residential experts reveal exactly where you should look and what you should research in order to profit from some property upgrades.

SydneySydney’s renovation boom is still in full swing, with a number of home owners seeking to add value to their current properties rather than upgrading in the midst of a listings shortage. The renovation option is well suited to a number of participants such as growing families needing extra space either for children or older relatives moving in or investors wanting to capitalise on the current housing boom. For those owners who decide to cash in and move on, quality renovated properties are attracting good premiums at present. This has resulted in the more experienced renovators realising good profits leading to strong levels of confidence in the wider renovation market.

Popular renovation areas within the eastern suburbs include the beachside locations from Bondi Beach to Coogee in addition to the more traditional heritage areas of Paddington, Woollahra and Queens Park. Popular renovation areas within the inner west include Newtown, Erskineville and Balmain.

Renovations of both units and houses are proving popular within these areas particularly with units in the $1 million to $2 million range and houses in the $2 million to $4 million range. Strong demand is being shown for renovations completed to a high standard with high quality fixtures and fittings. These quality renovations, which often might stand out from others on the market, are attracting the owner-occupier who falls in love with the property and are seeing premium prices being achieved. Properties that have retained and restored some of the heritage and period features to units and houses in keeping with the suburb’s character are also seen to attract strong demand. Owners are time poor and are willing to pay extra if the renovation is completed to a high standard rather than undertaking the work themselves.

Popular renovation areas in the west include suburbs that have been around for 20 years plus with multiple dwellings in need of a revamp. A recent example is a house in Beaumont Hills which sold in original condition (built 2001) for $1.05 million in February 2016. After updating the kitchen and flooring throughout and a modern paint job to the exterior, the property achieved an uplift of $185,000 in 12 months, selling for $1.19 million in February 2017. A nice little earner.

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(Before and after of a property in Beaumont Hills. Photo source: RPData and Realestate.com)

Month in ReviewJune 2017

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It’s been hard to make too many mistakes buying property in these areas over the past few years however generally some renovation mistakes may include: the quality of renovation; colour schemes or fixtures and fittings that don’t match with the style of the suburb; unconventional floor plans and design failures; and not choosing the right building to renovate. One of the biggest mistakes a renovator can make is to over capitalise. This is more common in suburbs with lower price points where even minor blowouts in budgets can result in an over capitalisation. The best way to ensure this doesn’t occur is look at any examples of the end product that have sold in the local area. If sales of renovated properties are within a certain price point it will give you a target and assist your budget to ensure the project will stack up.

With the popularity of renovation shows on television, more and more people are trying to jump on board. Channel 7’s ‘The Aussie Property Flippers’ program recently featured a property in Sydney’s eastern suburbs located at 4/61 Fletcher Street, Tamarama. The small 2-bedroom, 1-bathroom unit (58 square metres) was purchased in February 2016 for $780,000. With a renovation cost of approximately $80,000 (advised on the show). The property sold in December 2016 for $1.065 million.

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(Before and after photos of 4/61 Fletcher Street, Tamarama which was recently featured on Channel 7’s TV program ‘The Aussie Property Flippers’. Photo source: PriceFinder.)

In Sydney’s CBD a 1-bedroom, 1-bathroom unit with 1-car space located at 49/177-181 Clarence Street Sydney (circa 1890 Victorian building) was purchased on 26 February 2016 for $710,000. After full renovation to a high standard it sold in April 2017 for $1.13 million.

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After(Before and after photos of 49/177-181 Clarence Street Sydney. Photo source: PriceFinder)


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Within the southern areas of Sydney, renovations have also proven popular with both owner-occupiers and investors, particularly in the beachside areas of Cronulla and Sans Souci. Units, townhouses, villas and detached housing in the $750,000 to $1.5 million price range have been popular with renovators. Having proximity to the beach provides great potential for a profit.

Similar to the eastern suburbs and inner west, owners in the southern areas of Sydney undertaking very basic quality renovations are not seen to be doing as well as those who undertake more extensive renovations to capitalise on the buyer demand. The strong market conditions over the past few years has also been a major factor in not only the profits made but also the confidence of the people undertaking renovations.

Sydney’s prestige market has seen home owners seeking to add value to their own properties rather than upgrading in the midst of a listings shortage. There is fairly limited evidence of flipping within the prestige market as the purchase prices (including transaction costs) mean there are less people willing to take the risk. One known example is a property located at 55 Suttie Road, Bellevue Hill in the eastern suburbs which was purchased on 23 December 2015 for $3.9 million. After a good quality cosmetic renovation, the property was resold on 15 November 2016 for $5.75 million.

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(Before and after photos of 55 Suttie Road, Bellevue Hill. Photo source: PriceFinder)

The renovating option is a wise decision in the current climate in Sydney. Interest rates are historically low for owners borrowing money to renovate and additionally, if the house has been owned for a number of years there should be equity that can be accessed to complete these works if required. Also with the rapid rise the market has seen in the past few years, renovators have experienced a dual uplift from both the wider market and the new improvements.

The costs associated with the alternative can, in some cases, outweigh the benefits. Buying a larger or more modern home will include additional expenses such as stamp duty which can run into to the tens to hundreds of thousands of dollars depending on the value of the home. This alone may deter many home owners who love the suburb they live in but just need a larger or better configured property to suit their requirements.

South-westExtensive renovations are less common in locations further from the CBD such as south-western Sydney (areas such as Liverpool, Fairfield and Campbelltown LGAs). As this market is more heavily driven by investors, renovation works are usually aimed at cosmetic works or creating additional areas of occupancy which will ultimately have more impact on the rental return being achieved. Granny flat construction is quite common as the higher than average rental returns can be appealing to investors.


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30 Craig Street, Smithfield is one example of a property purchased in original but poor condition in February 2016 for $575,000. The property was fully renovated, slightly extended and reconfigured to include an additional fourth bedroom and bathroom. This property sold in March 2017 for $860,000. While extensive renovations are not quite as common in these locations, it does indicate the potential if renovation works are carried out correctly to meet market demand in the area. This example represents an approximately 50% value increase in just over 12 months, albeit market growth had a big part to play in this overall increase.

Before

After(Photo source: CoreLogic)

It is likely that these types of renovation projects will become more common in the future, however currently owner-occupiers are more likely to buy new house and land packages or a complete rebuild on their current land rather than carry out extensive renovation works.

Renovating in recent years has generally paid off and minor mistakes are somewhat mitigated by the increasing capital values. Given that the market appears to be slowing in some areas, it’s likely that these renovation mistakes are more likely to be realised, particularly if interest rates are to rise simultaneously. Furthermore, it will be interesting to see if any other recent federal budget changes or continued APRA regulations have an impact

on renovation decisions, particularly within the investment-driven property markets of south-western Sydney.

CanberraBuyers looking to renovate in the ACT tend to gravitate towards the outer areas such as Belconnen, Woden Valley and Weston Creek. There are also some opportunities in the inner north suburbs of Lyneham, Watson and Downer. The majority of these houses were built in the 1960s and 1970s and are on much larger blocks than are available in new suburbs. Recently there has been some significant capital growth in these areas and well renovated houses have been selling at a premium.

In some cases renovators prefer the character of an older house but want the functionality of a modern home. This is especially true for original houses built in the 1930s, 1940s and 1950s in suburbs such as Ainslie, Braddon, Campbell and Yarralumla. Ex-government houses in established suburbs which have been sold to private buyers are also popular for renovators. They are relatively small houses however are often on large blocks meaning there is good potential for extension. Popular options for ex-government houses include adding more bedrooms and bathrooms and demolishing internal walls to create larger open spaces.

The majority of renovations in the ACT are in the detached housing market. Unit renovations


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have been done however the large supply of new apartments currently on the market has meant that the profits are relatively low for these projects. Owner-occupiers seem to be the most common to complete renovations on houses in the ACT.

IllawarraThere is currently a lot of residential construction happening in the Illawarra. This comprises a mixture of new dwellings in new subdivisions, new infill and unit construction, knock down rebuilds, substantial renovations and extensions and minor renovations. A number of suburbs are in the process of transforming through family homes being sold for the first time in generations and younger owners then updating or re-building. This is happening in the older established suburbs north of Wollongong and those in and around the Wollongong and Shellharbour CBDs. This type of property is popular with first or second home buyers along with investors who are skilled in a trade themselves.

It appears that premiums are being paid for properties (dwellings or units) where the purchaser can move in and not have to do a thing. This can either be a new build or one that has had a recent modern transformation. The residential market is currently strong so it is hard to tell how much is a premium or how much is market movement. A recent example of a quick flip is a house in Mount Pleasant which sold for $710,000 at the end of

August 2016 as an older style, circa 1960 single level 3-bedroom, 1-bathroom dwelling. It has had a complete renovation but no extension and sold again in April 2017 for $1.075 million. Allowing for a renovation budget of around $150,000 to $170,000 and market increase of 10% to 15% during this time (approximately seven months), the profit is circa $100,000.

NSW Central CoastSome reasons for renovating are to make an income, improve the value of a property or overcome the need to shift homes, meaning the kids can remain at the same school and a longer commute to work can be avoided.

Closely aligned with adding value, those starting out with limited budgets or borrowing capacity buy in less expensive areas and carry out renovations to increase their equity.

Although not definitive, a good gauge of what stage the property cycle is at can be seen from the valuation requests we receive. We can analyse this from the property type and specifics of the request – for a new purchase, a change from one lender to another or funds required to carry out renovations or extensions.

Lately, there has been a slight increase in renovation or extension on completion assessments. This tells us the market cycle is on the move again and this

generally follows a period of growth where values of home purchases are getting beyond many upgraders and a decision is made to stay and renovate rather than move.

We are seeing this growing in many parts of the central coast region.

From our perspective, we see more valuation requests received for owner-occupiers seeking funds to carry out renovations. We believe the reason for this is that owner-occupiers tend to spend more on renovations or extensions to improve personal comfort or functionality with the medium to long term in mind – think that often used term ‘forever home’. Whereas, investors usually spend less on make overs and use their own funds with the prime motivation of increasing the returns for as small an outlay as possible.

Properties available for renovation can be located close to the main centres or the beach and lakefront areas. They’re the ones advertised as having enormous potential, renovate or detonate, suited for tradies and similar. They can just as easily be located in those suburbs previously seen as undesirable but thanks to the strong market over the past few years, have proven affordable to new entrants in the market. Suburbs that spring to mind in this region include Narara, Niagara Park, Killarney Vale and Berkeley Vale.


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Those closer to the water include Terrigal, Wamberal, Forresters Beach, Bateau Bay and The Entrance. There has been a noticeable level of renovating going on in these suburbs of late and we attribute this to the strong market paving the way for many to upgrade their locations.

While not seen in any way as undesirable, a popular area for renovators is The Peninsula part of our region. This includes Umina Beach, Woy Woy, Blackwall and Ettalong Beach. These areas have been going off over the past few years and have seen many renovations along with knock down and rebuilds. These areas have proven a gold mine for those who have owned property for a number years with extraordinary growth in values seen of late. Many have taken advantage of this growth and sold.

When considering the type of renovation being carried out, we again differentiate between owner-occupiers and investors.

Owner-occupiers seem to target high spec kitchens and bathrooms – nothing new there. However we are also seeing a number of new pools, new flooring, garaging, dedicated media or home theatre rooms, lighting and window furnishings. In other words, the things that make life more comfortable and to possibly set a point of difference over the neighbours.

Renovators by and large will target only the necessities which include a cost effective kitchen and bathroom makeover. Rarely do we see an investor spend a lot on their investment if the return ratio doesn’t justify it.

Readers will see that our talk so far has only referenced the housing market and the reason for this is that while renovation of units may be the norm in some areas, the central coast region doesn’t seem to have much unit renovation occurring. It hasn’t been entirely absent, just not something that is popular. Maybe as the new units being built now begin to age over the next decade or so, it may become more noticeable.

In our view, those suburbs which we feel have good renovation prospects include the older parts of Terrigal and Avoca Beach, Killarney Vale, Berkeley Vale and Bateau Bay.

The standout suburbs for the future for renovation projects include the northern end of the region at Gorokan, Toukley and Budgewoi but much of their success will depend on the market remaining strong. With current values in some of these suburbs starting from a base in the mid $300,000s, a strategic spend of $50,000 will put most of these properties in the $400,000 plus segment.

An important thought to bear in mind with a buy and renovate plan is location. As we have been

leaning toward older suburbs with tired old dwellings the presence of some properties with completed renovations should be the centre of focus. Avoid the newer areas such as Woongarrah, Hamlyn Terrace, Wadalba and the newer part of Terrigal. These have newer dwellings with limited opportunity to renovate and make a worthwhile gain as housing is generally too new. That said, look hard and be business like as there are opportunities. Extending onto existing dwellings in addition to renovating may be necessary.

Research, planning, costing and execution are the key factors that will result in success or failure. Research, research and more research is fundamental as this is the starting point. The other factors will depend on this first step.

NewcastleWe are at that point of the cycle where it’s a fine line between upsizing your current dwelling or simply staying put and adding value to your existing home with an extra couple of rooms. The option to stay and extend is attractive when you look at the savings you would make on the transactional aspect of moving to a new home. You save stamp duty, agent’s fees, finance charges and moving costs which on a reasonable home can be close to $100,000 in real dollars. Utilising that money on your extension can really kick start your plans.


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The key driver of the Newcastle and Lake Macquarie markets at present is the lack of stock available; essentially the supply side is very low. When you have a low supply side, as long as demand is reasonable and constant, this can place upward pressure on prices. This in turn raises values and in many cases the price has increased enough to set a new benchmark level for your land.

The increased price of the underlying land may be such that it is economic to knock down your existing home and build a brand new house. As an example, you may have purchased your home originally for $350,000 in 2005. Your house may be worth $650,000 now (not unreasonable here in Newcastle). Your underlying land value might be $450,000 which far outstrips your initial purchase price and makes building a brand new home where you currently live more feasible.

We note that builders’ prices and waiting periods are significantly up across the board which indicates strong demand for renovations and extensions. We often see builders’ trucks in quiet suburban streets clogging up both sides of the road with extensions and small building projects. Anecdotally the home

renovation boom is very much the flavour of the moment with the number of renovation programs on TV indicative of current trends. At present, in strong localities it appears quite hard to over capitalise with sales seemingly attaining record prices on a weekly basis.

Will this continue?

NSW Mid North CoastWith the rapid population growth along the mid north coast there is rapid expansion and development of new residential estates in the major towns and coastal villages. However, most of these new estates are located on the periphery of the towns and generally aren’t centrally located or close to established services, shops and beaches.

So, if you wish to live close to the beaches or centrally within the towns, you will most likely need to purchase an older dwelling or unit and renovate.

We note that it is becoming more prevalent for existing landowners in these established and central areas to extend or renovate their existing dwelling, villa or unit rather than move out to the periphery of the towns and build a new home.

The renovation market in this area is dominated by the owner-occupier, although to a lesser extent we also have some development style purchasers buying older dwellings and units in beachside locations and renovating then on-selling, generally at a profit.

Renovation work in this region ranges from basic internal refurbishment of some of the older central units within the towns to complete renovations and upgrading of older dwellings close to the beach and rivers in established and well sought after residential areas.

Within the canal estates of Port Macquarie and Forster, we are also seeing a rapid rise in renovation of original and older dwellings. With no further canal estates being developed and most already fully developed, anyone wishing to live in these localities does not have a choice except to renovate if they wish to have a new dwelling.

NSW North CoastLismore/Casino/KyogleWith many older houses in original condition in this locality, the Lismore area is popular with renovators both for owner-occupation and investment. The lower price bracket of the older style original dwelling is particularly popular with first home buyers looking to get into the market.

The ideal property for renovation within Lismore would be an older style dwelling in a flood free location under $300,000, with original kitchen and bathroom and overgrown gardens and lawns. This combination makes for an easy renovation and the most dramatic overall makeover. Firstly get the yard looking tidy, update the kitchen and bathroom, paint internally and externally (where applicable) and


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finally look at flooring. Many of the 1960s dwellings have beautiful timber flooring hiding under the old shag carpet just waiting to be discovered.

A great example of this in Lismore is a 3-bedroom weatherboard property on Ballina Road. The property was purchased in September 2015 for $179,000. Completely overgrown with vegetation, the house was not visible from the street. It had an original kitchen and bathroom and the rear yard was in a similar overgrown condition to the front. The vegetation was removed and the house was gutted. A new kitchen and bathroom, plastering and polished flooring were installed, the rear deck was renovated and it was painted internally and externally. It was such a dramatic transformation (on an arterial road) it almost caused traffic accidents. The owners created a Facebook page to keep people updated with the progress. The property has just been listed for $389,000.

As Casino and Kyogle are small regional towns, they are generally not subject to the substantial vagaries of the property market experienced by larger metropolitan centres on the coast or main city centres. Hence, the capital gains or losses do not appear to be significant to the overall value of the property.

That being said, any reasonable capital gain in such regional towns is generally achieved through responsible renovation, i.e. renovations which are not cost prohibitive.

Most of the activity is generally in the domain of the owner-occupier and involves the overhaul of the kitchen and bathroom.

Typically, this can be achieved from the outset by buying well. This invariably means the house is in need of TLC and is within close proximity of the town centre or near the usual town services including schools and shopping centres.

One of the most popular avenues for renovation is the kitchen and bathroom, followed by a general tidy up of the interior and exterior. Other more enterprising options are to possibly create a third or forth bedroom if a particular older style house has a significant living room space and can be accessed without travelling through an adjoining bedroom.

Given the size of Casino and Kyogle, there is no real distinct suburban area that benefits more than another.

Caution needs to be exercised by wannabe renovators as the expected profit should not be unrealistic. If costs are kept under $10,000 to $20,000 for a combined renovation of the dated original kitchen and bathroom then there should be a similar or slightly higher lift in the overall market value of the property. Anything that improves the overall rent level will naturally be of interest to the investors.

One item of renovation that has been apparent in our experience is the casual application to exterior

and interior paint over the original surface with no adequate preparation carried out prior to applying the new coat of paint. The result is that less than a year later, the paint begins to flake and becomes quite an eyesore. It is very important for exterior timber walls of older houses to be prepared correctly i.e. stripped and prepared, to ensure a quality surface finish that will stand the test of time and weather.

Units are a slightly different kettle of fish as there does not appear to be a significant demand for the older style brick and tile unit in Casino or Kyogle. However, any improvement in the interior from basic original to a tidy, fresh and semi modern living space would have a positive impact on the rental level…. just don’t expect significant capital gains and costs should be kept to a minimum.

Renovations that don’t work are put simply, anything that is over top in expense that doesn’t fit in with the overall nature of the property, for example a dated 1960s brick home with a high quality, modern kitchen and bathroom costing over $30,000 to install in an area with similar, dated houses is obvious.

Ballina/Byron Renovation in the Ballina Shire is not a particularly popular pastime, but is definitely present to a certain degree. The main renovation techniques are complete renovations of kitchens and bathrooms in an attempt to modernise the home.

The renovation revolution is not limited to investors,


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but can also be seen for owner-occupiers. On one end of the spectrum we have investors renovating with the purpose of trying to turn a profit, whether that be in rental return or overall market value. Then there are the occasional renovation attempts made by the owner-occupier purely for personal satisfaction.

Properties that are most targeted for renovation with the driving factor of creating a profit are older homes located close to town. The close proximity to town has a greater appeal for resale with the attraction of local township vicinities. As you progress further outside of the CBD, your potential for renovation becomes less apparent, as you come across newer subdivisions of land and modern built homes.

The main renovation work undertaken to make a profit on any given home is targeted firstly at updating the kitchen and bathroom facilities. A change to the flooring may also be considered in an attempt to create an updated or more attractive appearance.

Unit renovation is most apparent in the suburb of Ballina, but is most commonly seen specifically in townhouses and villas. There is mixed interest in unit renovation across the Ballina Shire by both investors and owner-occupiers.

In Ballina, there are profit margins to be gained in older homes built around the 1970s. An example of this would be a recent purchase of one of these homes for $379,000, investing around $50,000 for renovation works and profiting by being able to sell it for upwards of $470,000.

There are no specific suburbs in the Ballina Shire where evidence of renovation has been anything but positive. It just depends on the current market that any given purchaser enters into. They need to be aware not to over capitalise, particularly when choosing to update a unit.

Renovation in the Byron Shire has been quite prevalent in recent times. The lack of land availability and increased prices of modern homes has directed purchasers down the path of renovation rejuvenation.

The exercise of renovation is not particularly dominant with investors, but can be seen more frequently with owner-occupiers. The market is not controlled by owner-occupiers however the renovation revolution certainly is.

The properties chosen by owner-occupiers to benefit from renovation are located closer to town. They are purchasing already established homes close to CBD facilities and undertaking minor or major renovation for their own gratification.

The opportunity for renovation is scarce the further you move away from the CBD as you tend to come

across land opportunities or new subdivisions that provide minimum chance for people looking to benefit from renovation. Land opportunities (new sub divisions) are slowly rising and new subdivisions are increasing.

The renovation work for housing in this area in order to make a profit includes updating the kitchen, bathroom and the external façade. The option for renovation to units does appeal for properties built around the 1980s to 1990s. However as the predominant buyer of units is still investment driven in the coastal resort towns of Byron Bay, Lennox Head and surrounds, it is becoming less popular.

In terms of outlining suburbs that are more suited to renovation, we believe that profits can be made in Ocean Shores. There are properties in the $400,000 to $500,000 vicinity that with a little renovation are reselling for around $600,000. Whereas in Lennox Head, buying a property for around $700,000 and spending $200,000 to $300,000 in renovation costs will not guarantee a result of an over $1 million sale price. The coastal resort towns are not renovation driven in terms of capital growth due to an overall increase in cost of works (rate per square metre) as demand for building is so strong.

In the Byron Shire we are not of the opinion that renovations are redundant in an effort to create a profit margin, however it doesn’t necessarily make sense to outlay an initial investment of $800,000


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in a suburb such as Lennox Head and then invest an extra $200,000 to see any sort of gain in today’s market.

The Clarence ValleyRenovations are rife across all property types in Yamba and Maclean. Owner-occupiers and investors alike are capitalising on the firming market sentiment and capital growth increases. With limited stock on the market and even more limited stock in truly original or renovate-able condition, all available stock seems to be being absorbed to the market. With rental demand expected to increase into the near future, many investors are looking to take advantage of a higher than average rental return and we are seeing dollar for dollar value realised in terms of the cost of renovations undertaken. Some renovators are even opting to build granny flat style accommodation (in addition to their primary residence) and rent out such accommodation to fund further renovations to their dwelling. As in any area, renovators should remain vigilant when it comes to over capitalising a limited asset. Overall, while consumer sentiment continues to firm the renovator’s market will likely continue parallel.

Coffs HarbourOver recent years the Coffs Harbour market has been dominated by retirees and investors. Both these market sectors tend not to want to renovate. The investor is looking for minimal outlay and

repairs to maximise return as soon as possible. The retiree often is over all that or knows better. They have worked their whole lives and now just want something shiny and new.

Most renovation is within the owner-occupier market, with young families and professional couples looking to make a home and potentially add value. In addition there is a proportion of large solid late 1980s and 1990s dwellings in the mid-price bracket in established suburbs which are in need of renovation. These dwellings attract renovator owner-occupiers above new dwellings if there are other redeeming features a new dwelling does not provide, for example proximity to beach, views, large land area or proximity to services and schools.

The lower end unit market of Park Beach and other inner Coffs Harbour areas are flush with small dated unit product. Many of these units are small in size and cost of renovations to these units can be controlled tightly. Unit renovation will improve rental return potential and market appeal to purchasers. The same can be said for older cottages. The mistake is to over capitalise with too grandiose plans and over the top quality. These are examples of when the cost of the renovation can potentially exceed the added value. In the lower end of the market, the trick is to keep it simple. No mechanical pergolas to patio roofs, no excessive quality stone bench tops, marble tiling or European appliances and no structural variations.

Renovation to higher end property tends to be viable only when the location is prime, such as the beachside suburbs of Diggers Beach, Korora, Sapphire Beach, Emerald Beach, Woolgoolga or centrally located within the Jetty Precinct. Often the renovation of an older dwelling can be more expensive than construction of a new dwelling. Traditional floor plans and the large size of some older dwellings make renovations very costly and often the project is fraught with compromises which can result in the original vision unfulfilled or an unfinished renovation above budget. It is regular that these types of renovations exceed the added value over the short term.

The problem in the current peaking market is that construction of new dwellings and unit complexes is also at the peak with limited tradies available for renovations. The wait on materials is long and materials are at inflated prices. These factors can jeopardise the renovator’s potential for resale returns in the short term. This is why renovation projects appeal more to the handyman who can complete the work themselves or has connections in the construction business. Often the unrealistic costing or underestimating the timing of a project can be the pitfall of naïve investors looking to flip a house.


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TamworthRenovation is most definitely a popular option within the Tamworth region with both owner-occupiers and investors taking part. It’s slightly more favoured by owner-occupiers due to the fact that they can chip away at things as they occupy the property rather then having to get it all done in one hit as investors do, or they miss out on rental income.

Buyers are looking for older dwellings close to town which they can renovate and create capital growth, or just to be able to live in a comfortable house in a nice area.

There is no hot area for renovators within Tamworth as all suburbs are options, with personal preference on location being the defining factor. There is a vast difference once you move out of Tamworth city and into the smaller surrounding towns such as Manilla, Duri, Kootingal etc. With land values lower by as much as 75% compared to Tamworth City it makes for cheap buying, yet with limited potential for growth. However, for first home owners and investors there are plenty of cheap houses that with a quick renovation can return a nice rental yield.

The most common renovations include removing walls to create open plan living along with a new kitchen or bathroom, paint and floor coverings. With options on offer such as Bunnings kitchens and bathrooms, it makes for reasonably cheap renovations that can add a lot to a property.

Unit renovation is an option however not a favoured one. The unit market in Tamworth is quite small and any renovations taking place are generally minimal i.e. basic kitchen updates and more often than not carried out by owner-occupiers.

East Tamworth is where the most gain can be made. With high land values and being an in demand area, a renovation of an older dwelling with fresh paint and fit-out can result in high gains ranging from $20,000 to $100,000 depending on the original condition and the final quality of the renovations.

Areas such as Coledale and some parts of South Tamworth and Hillvue do not overly benefit from renovations. These are generally not sought after locales where the market is driven mostly by investors who are after the high rental returns which do not get any better with a renovation. With little to no growth in these particular areas, investors often enjoy the high yield without spending the money.

DubboRenovation has not really been popular or a driving factor in the Dubbo property market over the past 12

months. The market has seen demand for new builds out weighing demand for renovated dwellings.

There has been a steady supply of new blocks of land coming onto the market within new estates. Both demand and supply have been in sync and therefore there have been no issues with a lack of supply driving people into renovating.

The renovation market is driven mostly by owner-occupiers, including both the first home buyer and retirees. First home buyers are generally entering into the market on a budget and fixing up the property as they go. Retirees are renovating as they do not want to move, they like the location of the property and have friendly and supportive neighbours.

Central areas of Dubbo have been hotly contested by the investor market. This is due to its close proximity to the CBD along with flexibility of the R1 zoning, providing subdivision potential. This areas is driven by the investor market rather than owner-occupiers, with investors looking for dual occupancy potential with renovating the existing dwelling and subdividing and building another dwelling on the other title. The further away from the CBD, the less the demand and need for renovation. As the distance from the CBD increases, the zoning changes to lower density residential uses, making it harder for dual occupancy to occur. In addition, the supply of land increases further from the CBD.


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Kitchens and bathrooms are the main works that renovators look at updating to make a profit. Investors look for dwellings with original Prime Cost items to complete a quick renovation (including kitchens and bathrooms) then selling again (also called flipping). A complete renovation is rare in the Dubbo market, however owner-occupiers will look at this if they are intending to stay in the property long term.

Unit renovations are very popular, due to no new flats or units being constructed within the Dubbo market. The current supply of units are existing/ aged, therefore the need to renovate is much greater than single use detached dwellings.

Older heritage style homes in central Dubbo on large blocks with subdivision potential have more appeal for renovationand could attract a good value once complete, as long as the renovation is completed to a high standard.

Renovation does not work in areas where prices are still at the bottom end of the property market. It is easy overcapitalise on these if you’re not careful. This can be seen in renovating poor quality housing stock in inferior locations. A big renovation mistake would be over capitalising on homes with expensive renovations when there are new builds nearby at a lower market value, along with renovating larger homes when the market has shifted to demand for smaller dwellings with less yard area.


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MelbourneInner CityInner city suburbs are highly sought after by owner-occupiers and investors. For example, just in the past two years the median price for houses in the suburbs of South Yarra and Carlton have increased by 42.7% and 25.7% respectively (source: RPData). Unable to afford relocation, owners turn to renovation of their existing properties to upgrade their living conditions while also saving money that would otherwise go towards acquisition and selling costs such as stamp duty and agency and legal fees.

In inner south-east suburbs such as Windsor and South Yarra and inner-north suburbs such as Fitzroy and Carlton, a popular choice for renovation works is the addition of extra bedrooms and bathrooms to original Victorian terraces by extending to the rear or adding a second level, however there are some significant limitations. Firstly, the entry level price point is high in the inner city suburbs and secondly, owners are faced with obstacles and difficulties of obtaining planning approvals for renovation works due to compliance with council’s heritage protection, access and overshadowing policies. Due to these restrictions and regulations, renovations usually take longer and ultimately end up costing more for the owners, making them less attractive to the investor market.

77 Raleigh Street, Windsor (Source: RPData)

When done right however, renovations can have a major positive effect on value. Pictured above is a circa 1900, 2-bedroom, 1-bathroom Victorian terrace which was renovated and extended by adding an additional bedroom and bathroom. The owner originally purchased the property in April 2014 for $819,000, added capital improvements and sold the property for $1.91 million, a 133% increase in just two years of ownership, when the average median price for houses in Windsor has only increased by 51.5% (source: RPData).

For investors in the inner city fringe market, renovations generally fall under one of two categories: minor renovations within conventional highrise developments (such as updating the kitchen or bathroom) in order to increase presentation and marketability as well as aid with leasing (but not

adding much to the resale value) or, more significant renovations to older boutique apartments (circa 1970s to 1980s low rise buildings) to make them more attractive to a wider market and increase return on investment.

PrestigeRenovations in inner south-eastern suburbs such as Malvern and Malvern East are increasingly popular amongst owners and investors. With a large portion of the dwellings in these suburbs being period style with construction dates ranging from 1890 to 1930, very few of the original style dwellings or even dwellings with dated renovations exist. It has been noted that buyers are willing to pay a premium for properties with dated renovations, with the trend to renovate according to their personal style rather than redevelop the property.

Due to properties in the area being of higher value, renovations are rarely on a small scale. Most renovations are quite substantial in size and cost, with many opting to fully renovate the interior while also extending the existing dwelling. With much of the area affected by various Heritage Overlays, the period façade must be retained to preserve the historical significance of the era.

The recent sale of 81 Claremont Avenue, Malvern for $3.95 million is an example of a high quality renovated period home. Since its previous sale in November 2011, a significant renovation was


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undertaken to this 1890s residence in 2014, including the addition of a second storey, an in ground pool and an internal upgrade.

Source: PDOnLine

South-eastern suburbsRenovations in the established inner south-eastern suburbs have become increasingly popular in recent years, with TV programs such as The Block and House Rules appearing to have peaked investors’ interests in the popular trend.

Bayside suburbs, in particular Hampton and Sandringham, still have a substantial number of period dwellings with many incorporating Heritage Overlays to protect the historical significance of the era, and with specialised properties such as these, renovation is the most popular choice with home owners.

The popularity of renovated dwellings in the area is evidenced by the recent sale of 38 Myrtle Road, Hampton. The property originally sold in December 2013 for $1.197 million, however fast forward three years and add a substantial renovation, the now contemporary Californian Bungalow sold in October 2016 for an impressive $2.8 million, earning its owners a 230% jump in value in a short amount of time.

Source: RP Data

Investors are also seeking to pay a premium for unrenovated or semi original dwellings in order to renovate according to their own personal style. This is evidenced by the recent sale of 21 Grout Street, Hampton. The 619 square metre, semi original Art Deco brick dwelling sold for $2,288,500 which was an impressive $488,500 above the reserve. An

existing Heritage Overlay on the property may deter developers, however properties such as these are especially popular with families looking to move into the coveted bayside area, known for its proximity to beaches, local shopping strips and a variety of schooling options.

While renovation is the current trend, it’s always recommended that home owners and investors be wary of construction costs when renovating to ensure they do not over capitalise and risk a loss on their investment.

Eastern suburbsCurrently we are observing renovations being completed in the middle to outer eastern suburbs by owner-occupiers. Home buyers are purchasing properties in the area they desire to live in whether they are renovated or not and then renovating them to their taste. In particular we can see this within the middle eastern suburbs such as Nunawading and Mitcham. Currently there is minimal difference between the sale prices of unrenovated and renovated properties. This is due to the low amount of stock on the market.

In some areas properties can be over capitalised by renovating them as the highest and best use would be as a development site. This is particularly evident in the middle eastern suburbs. An example of this would be the following two properties.


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70 Winmalee Drive, Glen Waverleysold 18/3/2017 - $1.116 million

75 Winmalee Drive, Glen WaverleySold 20/4/2017 - $1.1 million

The above properties illustrate that the quality of improvements in some areas do not reflect added value. In this case 75 Winmalee Drive was in better condition than 70 Winmalee Drive however, 70 Winmalee Drive sold for a higher price. This is due to the fact that the highest and best use for these properties is redevelopment.

As you get into the mountainous suburbs of the Dandenong Ranges, renovations do make a difference to value. This is particularly evident in Kalista and Kalormama where similar sized blocks of land with renovated dwellings are selling for more than unrenovated dwellings.

Overall, renovations can add value in the eastern suburbs unless the highest and best use is as a brand new dwelling or development site. This is more evident in the middle eastern suburbs than the outer eastern suburbs.

Northern suburbsOverall, renovations appear to be relatively popular within established areas of both the inner and outer bands of the northern suburbs. This market is typically dominated by owner-occupiers looking to on-sell in the short to medium term, however there are still a number of investors looking to immediately on-sell after renovation works are completed. Another prevalent trend is renovating

original dwellings from the 1960s, 1970s or 1980s and developing into two lot subdivision with a unit or townhouse at the rear.

Inner city suburbs generally provide a greater number of renovation prospects. It’s clear however, that the bulk of interest in dated properties relates to development potential and not renovation goals (where permitted). In developing areas of the mid to outer north, renovation does not appear to be as popular due to the large number of new properties.

Typically speaking, there is less potential to develop or subdivide in the inner suburbs and therefore more incentive to renovate as a way of adding value. Further from the city, there are a number of land developments planned and currently under construction prompting owner-occupiers and investors to buy new rather than renovating or buying recently renovated properties. Some owner-occupiers have indicated that while they may have made capital growth with their house increasing in value, any other house they would look to acquire would have equally gone up in value. Their view is to stay put and renovate.

In relation to freehold dwellings, kitchen and bathrooms are generally renovated as a minimum. Unit renovations do not appear to be popular given the relatively low price point to purchase new. Where


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renovation works have been undertaken they are often limited to basic aesthetic changes.

In the north eastern suburbs of Eltham and Montmorency, the buy-in price for a property needing renovation is in the order of $600,000 to $700,000 with sellers achieving prices in the order of $900,000 to $1 million after undertaking extensive renovation works. Within the middle to outer bands, without the help of capital growth, it seems renovations don’t generally add more value (profit margin) than the total buying cost, renovation cost, holding cost and selling cost. Those profitable renovations appear to occur closer to the town centre of the suburb.

One mistake is renovating a property that is too young; if it is near new it is unlikely that renovation works would increase the value enough to cover costs. Conversely, another mistake is renovating properties that are too old and thinking they are worth the same as new builds (with the exception of heritage properties). Renovating dwellings on potential development sites is less advantageous as developers then have to pay more for a renovated house they intend to knock down. It appears that developers would prefer to buy a rundown house with a view to knock down in the short term rather than paying more for a renovated dwelling with a high quality level of fittings and fixtures to knock down. Owner-occupiers and investors (in certain areas such

as Macleod and Bundoora) may easily over capitalise on renovations as developers are prevalent in the market and therefore are not influenced by the level of renovation of the existing dwelling.

Western suburbsIn the inner western suburbs, renovations are a particularly popular pastime in suburbs such as Footscray, West Footscray, Pascoe Vale and Moonee Ponds. Perhaps surprisingly, we estimate that 70% of renovation projects are tackled by owner-occupiers, with the remaining 30% by investors, however the extent to which renovations are conducted do vary considerably between both parties. A large proportion of owner-occupiers tend to focus on non-structural works such as renovating bathrooms and kitchens, replacing floor coverings and cosmetic improvements. Investors in comparison tend to focus their efforts on extending the property through means of adding an additional floor or extending to the rear. Both methods are effective for realising a profit at the time the property is sold, but the overall reward of extending tends to be considerably more. It is however important to realise that part of this profit can be attributed to the movement in the market as a result of the time taken to complete such extensive renovations.

Owner-occupiers also tend to employ similar cosmetic renovations to unit developments in the inner western suburbs. Due to the restrictions

imposed by their owners’ corporations, their renovation options are somewhat limited. Unit renovations are also popular with investors looking to make a quick profit and flip the property in a relatively short space of time.

Generally in the current market, renovations (both cosmetic and structural) tend to reap positive rewards. However, inexperienced developers and owner-occupiers have made the mistake of disregarding their target market and have in some instances removed the period features which many purchasers would come to expect. Other mistakes are to underestimate the amount of time taken to obtain council approval or meet the requirements of certain overlays or street restrictions.

Bendigo Bendigo is full of properties suitable for renovation. The region is strewn with heritage dwellings dating back to the 1850s and 1860s and every decade thereafter. Renovation is most common by owner-occupiers in the inner suburbs of Bendigo. With urban sprawl, inner CBD property is becoming increasingly sought after with properties in good locations being quickly absorbed by the market.

The most common type of renovation is the purchase of a 3-bedroom home around the $250,000 mark between two and four kilometres from the CBD, completion of basic renovation works and selling for


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low to mid $300,000. Key drivers in added value include the addition of an en suite to the master bedroom, the addition of an extra bedroom or creating modern living spaces such as open plan living in older homes.

Unit renovation is occurring in the market primarily by investors seeking maximum rental return. Capital value is not greatly improved however tenant appeal is greatly increased upon completion of a basic renovation.

Over capitalisation of renovations in areas not highly sought after by the market is the biggest error of renovators. Areas such as Long Gully, Ironbark and Eaglehawk are examples of where these types of failures are most prevalent. Areas where basic renovations are working are primarily inner suburbs such as Bendigo proper, Golden Square, Strathdale and Kennington. Certain areas within Bendigo proper such as Barkly Street, Wattle Street and Valentine Street are at the top end of the residential market. These properties require high quality renovations in order to achieve the best results. We are seeing buy in at around $1 million with renovations ranging from $250,000 and above returning results as high as $2 million.

In order to successfully renovate and profit a buyer must understand the current property market including the intended target market, have a clear vision of what they plan to achieve, stick to budgets, maintain time frames and be realistic about selling prices.

EchucaRenovation is generally completed in the lower market segments where the finished product will be at an affordable rate while not competing with new stock. Interestingly there has been limited demand for centrally located properties to be renovated with most older residences being demolished to make way for new builds. Longer term investors have also been known to renovate (including bathroom, kitchen and a general spruce up) basic dwellings in reasonable locations with a view to achieving a substantially higher rental based on a long term hold. This approach has been relatively good based on strong rental demand at the current time.

Care needs to be taken in many instances not to over capitalise in upper market segments in order not to compete with new housing stock albeit in secondary locations.

HorshamThe interest in buying and renovating residential properties has been increasingly popular within the Horsham market due to two main driving factors:

housing affordability and the increasing popularity of home renovation shows.

The renovation sector is dominated by owner-occupiers, using this opportunity to enter the property market and slowly develop a house into a home. Investors generally do the bare minimum to a property, only making it attractive to prospective tenants.

The Horsham West area is becoming increasingly popular with buyers, due to its many older style homes that provide an opportunity to be renovated. If done to a tradesman like quality, these can achieve greater returns if looking to on-sell.

While it is an increasingly popular pastime, renovators looking to on-sell a property must always keep in mind the current market conditions and be sure not to over capitalise in order to recoup the cost of the renovation.

GippslandThere are many first home owners and investors looking to purchase original or dated properties in order to benefit from capital gain on resale in the Gippsland region.

Closer to the CBD is always preferred, however renovators also have to compete with developers who wish to subdivide and build multiple units. There are also areas in major towns such as Traralgon, Sale


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and Warragul where purchasers are seeking original homes to renovate. There seems to be less stock in these particular markets, where marketing times are considerably shorter.

Most renovations we see include complete internal refurbishments of kitchens, bathrooms, floor coverings and painting. Removing walls can be an easy way to modernise houses, with open plan living being what the market seems to desire.

Unit renovation can definitely see increased rental returns, especially if the unit is in a location close to the town’s CBD. Younger renters will always prefer a renovated property.

There are renovation projects that don’t work however, where owners either over-capitalise (spend more than their expected returns) or have a somewhat different taste in style.

MilduraMildura was established in the late 19th century as an irrigation colony and then expanded following World War I as a soldier settlement area. The original settlers had very limited resources and as a result, much of the initial housing was of only basic standard. Many of these early homes were either eventually demolished to make way for better standard homes or lack the character desired by people wanting to renovate them.

Fortunately there are a small number of better standard character homes and these have mostly now been restored. Most owners have completed the restoration with the intention of living in the home and so there is little re-sale evidence available. There tends to be solid demand for restored, character homes within one kilometre of Mildura’s CBD and appealing homes will generally sell well. One recent example is a pre 1950s home in Tenth Street, Mildura, purchased in an unrenovated state in 2009 for $185,000 and then extended and extensively renovated prior to sale in April 2017 for $640,000.

While there are few remaining opportunities to renovate older homes, there is potential to make a small profit from upgrading homes built between 1960 and 1980. The advantage with many of these properties is that they are in relatively central locations and usually have land sizes over 650 square metres. An unrenovated home of this vintage in one of Mildura’s better west side locations will likely cost around $225,000 to $300,000 to purchase, depending on its size, condition and extent of ancillary improvements. The presence of good natural light and reasonable room sizes are important things to look for.

Recommended works include renovation of the kitchen and bathrooms, replacement of floor coverings and the addition of a good standard

outdoor living area. It’s also important to complete appropriate landscaping works.

There is also potential to renovate older homes on 2,000 to 4,000 square metre rural residential allotments scattered throughout the surrounding rural areas of Irymple, Nichols Point, Cabarita and Birdwoodton. There is consistent demand for a better standard of dwelling in rural areas, particularly if located within ten kilometres of Mildura.

Buyers of these properties will be attracted by good landscaping and shedding in addition to the standard of the dwelling.


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BrisbaneThe idea of picking up a paintbrush and earning a little extra equity is something most Brisbane home owners aspire to. In more recent times, when detached housing in terrific locations has felt like it’s reaching beyond the abilities of many, renovation has offered a foothold into some of our city’s blue-chip addresses.

Brisbane has also always had a warm glow in its tool belt for a quintessentially state-named reason – the Queenslander. The timber-and-tin of our iconic homesteads makes them perfect for a reno project. Many were built way back in the early 1900s so they could probably do with a lick of paint or two.

The other thing about our Queenslanders, almost all are protected from demolition. These pre-war homes will be controlled by Traditional Character/Heritage overlays and registration, and are restricted from demolition. This might legally force the hand of owners and investors to do the work, however the market for renovatable cottages is strong in our city regardless. Properties that are appropriately priced do make a nice project for those willing to take on the work.

Theses home appeal to a broad cross-section of buyers. Not only do aspirational types look to put in a few weekends as renovation warriors in order to make their living space a bit brighter for friends and family, there are those motivated purely by profit as

well. Many have been trying their hand at the flip-for-dollars approach to making a quid.

As often mentioned, Brisbane has a reasonably low buy-in price so if you can pick your market and your property well, there’s cash to be made. This sector is probably doing even better at the moment with a rise in demand for completed property in blue-chip family locales. Professional mums and dads with limited time on their hands will pay a premium to have a very nicely renovated home – and those project hunters looking to make extra dough will be quick to cater to this demand.

If you had to pick a position where it’s easiest to ensure you don’t overcapitalise, it’s those traditional near-city suburbs where stock is limited and prices are rising. If you find an entry-level Queenslander in your most desirable address, and the price is right, then they are definitely a goer.

But don’t miss the boat – there are capital gains already underway in a number of these locations and you want to be the first buying into the market, not the last. The key indicators of a successful location? Proximity to the CBD, established precincts/nodes and desirable school catchments are common variables at the top of buyers’ wish lists.

Travelling further away from the CBD will give you a lower purchase price-point, but you must be more careful about overcapitalisation in these addresses. There will be a ceiling to what you can achieve once

you travel beyond the 5 kilometre to 8 kilometre ring. There are options to make a profit or create a gosh-darn wonderful home, but just check your fundamentals once more. Buy at the right price, be as close to facilities as possible.

Also, if you can create something special with your renovation, the better. Perhaps going up a level will give you a city-skyline view that will add additional value to the home.Another consideration if you’re new to this market might be to look at older units. These are veritable bargains at present because the oversupply of new unit seems to have had a negative flow-on to cheaper second-hand stock as well. Once again, fundamentals are your friend. Find older units in close proximity of town and with good local transport and café facilities. The other great thing about renovating an old unit is that it usually isn’t expensive. A coat of paint, a spruce up of kitchen cabinetry, new carpets and some window treatments won’t cost the earth but can make a unit feel like a whole new abode.

So where should you look to buy for your next reno revolution? If you have the means we are going to steer you inner city. Keep an eye on those great


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localities where buyers will pay a premium for just the right home in great condition. Check out New Farm, Teneriffe, Paddington, Bulimba, Hawthorne, Norman Park and West End. Entry level pricing sits at between $700,000 and $1.1 million in these addresses. As to what a renovation might sell for, it’s hard to imagine because these are the areas where the upper limits of price get retested with each prestige sale. Finished renovations to an exceptional quality will attract big money in these markets.

With every piece of advice comes a warning. Renovators should steer clear of areas with limited demand at present. It might look like we’re stating the obvious, however this is where you’ll overcapitalise. Usually it’s fringe locations where there’s a lot of supply where you’ll find it hard to make dough on. They’re tempting because they’re cheap, but you have to do your homework on end values, or you might get burned.

ToowoombaRenovation has always been popular in the Toowoomba region, particularly in uncertain financial times when owners possibly feels safer investing funds into their own property rather than buying or building a new property. With the large supply of housing currently at hand and some cases of reduced prices, owner-occupiers could however consider buying into a newer property instead of renovating.

The Toowoomba renovation market is dominated by owner-occupiers. The costs involved in renovation work don’t always add up to bring in reasonable returns on capital for investors. There is also usually little tax incentive, with most renovation work falling under capital works.

The market for potential renovation projects is quite broad across the Toowoomba area. Older character style homes in the circa 1900s to 1940s range have always seemed popular to buyers looking for a renovation project. These homes predominantly are character timber with detailed decorating throughout, high ceilings, timber floors and VJ walls. Such a property can potentially make good returns if it is purchased for the right price, however these are difficult to find. The majority of this product type will be found in close proximity to Toowoomba’s CBD in areas such as south, east and north Toowoomba and Newtown. Further out from the CBD, Centenary Heights, Rangeville, Mount Lofty and Harristown have also seen many renovation projects. The majority of this renovation work has been carried out on circa 1960s to 1980s houses of chamfer on brick and brick veneer, timber floors and slab on ground, generally more standard type housing.

Typically, areas further from the CBD are characterised by modern housing. As a result there is less demand for property to be renovated.

There tends to be a general perception that if a dwelling is dated, particularly internally, then it is in need of renovation work. The general market has higher expectations of living conditions now than in the past. These expectations could be a result of the exposure we all have to the building and renovation reality TV shows. This could be factoring in the thought process of a potential buyer inspecting a property listed for sale. The right price would have to be paid for a property to then renovate without over capitalising.

Care needs to be taken when considering the true costs and time it takes to renovate - it could be argued that this is portrayed inaccurately on the television.The most common renovation works carried out on a Toowoomba house are new kitchen, bathroom and laundry, floor coverings, light fittings, internal and external paint, rendering external walls if applicable and outdoor areas such as decks and landscaping.

With the amount of new unit product that has recently come to the Toowoomba market, renovation work on an existing unit is not a viable option for investors or owner-occupiers. The unit market has generally seen a reduction in prices and yields


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and it would be difficult to recoup funds spent on a renovation project. Even renovation of a unit in a more sought after location where infill unit development is present could prove risky to pursue.

The current Toowoomba market in most cases does not reflect large gains on renovation projects. Some locations and property types may in fact show a loss, some may break even (dollar for dollar) and some may show small gains. There are many factors contributing to this such as holding costs, transfer costs and labour costs. For example, a property of average dated condition in south or north Toowoomba can be purchased for circa $250,000. If $70,000 is outlaid to renovate the property, there is a good chance that the final market value could fall within the $320,000 to $340,000 range. This does not take into account the buying, holding and selling costs.

Overall, it is difficult to find a renovation project in Toowoomba to make substantial gains.

IpswichThe renovation revolution is an element of the Ipswich property market, however by no means a dominant activity. The majority of renovators are owner-occupiers.

Owner-occupiers choose mostly pre-war character timber housing as a project for renovation, while

investors actively renovate various property types, typically with a view to enhancing rental return in the short term however, essentially with a view to enhancing value and marketability of the property.

Ipswich is a price sensitive market and accordingly home owners should be very mindful of expenditure versus added value. For that reason the majority of renovations in this location are limited to painting, a new bathroom, new kitchen and floor coverings.

With the low price point of units in the Ipswich market, it is somewhat difficult to undertake renovation projects with a view to capitalising on works completed.

The suburbs of Ipswich that contain a number of character dwellings are typically the most popular and more highly regarded areas in which to undertake renovations. These include Woodend, Saddliers Crossing, East Ipswich, Newtown and Ipswich Central. The most prudent approach is to undertake renovations that enhance the presentation of the property. For example some minor carpentry work and painting can convert a residence with enclosed verandah to something that resembles a typical character dwelling that is very welcoming and has enhanced street appeal. Painting throughout, floor coverings and modern kitchen and bathrooms are always the best for achieving capital value improvement.

We would however recommend staying away from locations that do not typically attract renovators and that generally comprise dated or original housing. It is difficult to achieve top price for your renovated property when so many around you are well below the standard. This often leads to over capitalising.

The most important component of buying and renovating, particularly in a price sensitive area such as Ipswich, is the purchase price. Astute buying is so often where risk can be somewhat nullified to place yourself in the best possible position.

Gold CoastAs the central areas of the Gold Coast age, we are seeing suburbs such as Labrador, Southport and Arundel going through a resurgence with a lot more properties being purchased for renovations. The semi-modern but established areas of Helensvale, Hope Island and Runaway Bay are a mixed bag with less renovation projects, however this may be due to the higher price point within these precincts.

While the renovation market is reasonably popular across the Gold Coast it is far from being an obsession of home buyers. A number of suburbs are mostly owner-occupied and rather than moving from an area they love, owners are opting to renovate.

Investors are prominent in the central areas of Labrador, Southport and Biggera Waters. When you


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start going out of the CBD a little bit, buyers are mainly owner-occupiers.

The further out from the central areas (Gold Coast CBD), you will find a higher proportion of owner-occupiers. Investors in these localities generally choose new product for the tax benefits, rental returns and hassle free ownership. Owner-occupiers tend to do a lot more research and generally have a good idea of what a fair price for the property may be. These suburbs are usually under 25 years old or newly developed estates. However the older suburbs are generating interest for renovation projects, typically undertaken by owner-occupiers.

Hotly contested areas are typically Labrador, Southport, Ashmore, Nerang, Helensvale, Labrador, Coombabah, Runaway Bay, Miami, Mermaid Waters, Burleigh Heads, Robina and so on...., where the housing is 20 or so years old and warranting a few dollars spending on them.

Renovators generally sit at the cheaper end of the market in each area with $500,000 to $700,000 in most suburbs for a house and $300,000 plus for units or villas.

Purchasers have the idea of buying a property, undertaking a quick renovation that will give good capital growth and the ability to re-enter the property market in a higher bracket and start the process again.

Renovation budgets vary according to the locality and what is happening with surrounding properties. In a centrally located area it can be anything from a kitchen or bathroom makeover to the full Monty inside and out, depending on the budget of the individual and the state of repair of the dwelling.

In some of the older suburbs, original dwellings are being demolished with a full new construction being undertaken.

As you move to the more outer lying areas, the focus is on the kitchen and bathrooms and often, new flooring. The biggest factor in the equation is buying well and sticking to a budget.

Highrise unit development is predominantly within established localities, with owner-occupiers opting to renovate rather than relocate. Specifically, there hasn’t been an influx of purchasers in the past three months specifically buying units to renovate. These buyers are typically purchasing for investment and then re-entry straight into the rental market for an ongoing income stream.

Townhouses and villas are seeing some buyers who are renovating, however these are typically on an as needs basis and the property is then rented or owner-occupied. A few of the closer in areas are seeing renovating for profit, but again this is typically owners buying to renovate and occupy.

Labrador is an example of an area with good potential for renovation. Buyers can purchase a 2- to 3-bedroom townhouse in a small complex with low body corporate for around the $250,000 to $275,000 mark, spend around $20,000 on basic renovations and then list the property back on the market at around $320,000. This is an appealing entry price point for a first home buyer who gets a renovated property without the hassle of going through the process.

A couple of success stories:

3/259 Christine Avenue, Varsity Lakes, was purchased in December 2015 for $295,000 with $15,000 spent on cosmetic renovations. The property was then back on the market and sold in May 2017 for $435,000. This represents over a 40% gain in less than 18 months and also underpins the strength of the central and southern Gold Coast market.

Another example is a bit further out in the lower Logan area at Marion Road, Cedar Grove. This property was purchased in September 2016 for $400,000 and a full internal renovation plus site works was undertaken (kitchen, bathrooms, laundry, internal repaint, new carpet, site clearance). This dwelling had some defects that were also rectified as part of the renovation. The property has just recently sold for $500,000.


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A renovation project will work in all areas of the Gold Coast, lower Logan and Scenic Rim as long as the property is purchased at the right price and the renovation is relevant to the area and not over capitalised.

Over capitalising properties can be an issue in some of the more modest suburbs such as Nerang, Merrimac and Coombabah which are not new and not yet ready for renovation as the building has been well looked after and not considered outdated. The biggest mistake owners seem to make is not looking at the bigger picture and doing research on what the property will sell for post renovation. They also might undertake the renovation to their taste and not the general market’s which may lead to resistance when offered for sale.

Potential renovators should focus on purchasing at the right price, only completing renovations to a market acceptable standard and not going overboard with fixtures and fittings. They should ensure that the renovation is not overly taste specific and that if offered for sale would have good wide marketability.

Sometimes all that is needed is a basic upgrade to the finishes as the building may have a good floor plan that appeals to the wider market. Any changes would then be costly and not realisable.

Renovating for profit can sometimes be a dangerous road for owners but even worse for investors. Many people underestimate the cost of renovation work, underestimate the time it will take and overestimate the profit they will make. During recent property booms, owners and investors think they have made money by renovating houses but the profit they make from flipping houses has actually come from the general increase in the market. That is to say, they could have made the same or more profit by just holding the property and reselling after the market has increased. This can lead to a false sense of confidence in their renovating prowess. Try flipping houses in a flat or falling market and see how much money there is to be made! Only the very skilled, both financially and practically, can really profit from renovation. Otherwise, just do it for lifestyle reasons and enjoy your new kitchen and colour scheme.

On the other side, we do see people who over spend on the renovation and the full cost is not recoverable based on the sales evidence.

Our recommendation to people thinking about the renovation market in the Gold Coast area would be to buy well, work within a reasonable budget and be realistic with profit expectations.

Please note when reading the Property Cycle Clocks, these relate to the broad Gold Coast, Scenic Rim and Lower Logan localities. The market within the coastal strip from Paradise Point to Coolangatta and out to the M1 remains strong.

Sunshine CoastBeing a coastal area, beachside localities are always popular with those looking to renovate to cash in on the improved values on the coast. Typically older areas can be found around the original council centres of Caloundra to the south, Maroochydore to the centre and Noosa to the north. Typically the main driver of gentrification is that these older areas are well located and close to amenities and the beach, thus creating demand for these locations for people to live. Another driver in these areas is the lack of available vacant land which has forced buyers to look at older homes that require renovations as an alternative.

In Maroochydore, areas around the current and proposed town centres are in demand. Typically these are 1970s to 1980s vintage houses at an entry level of circa $550,000. Throw in some dollars and some nice design features and $650,000 to $700,000 should be achievable for a well presented property. Other areas of Alexandra Headland, Mooloolaba and Cotton Tree down on the coast and Buderim up on the hill have been going through this gentrification process over a number of years.


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Up north in the Noosa region, the areas in Sunrise Beach, Sunshine Beach, Old Tewantin near the river and town centre and also Noosa Junction are seeing a significant number of renovations and re-builds. Once again, being close to shops, cafes and beach or the river are the biggest attractions.

This type of gentrification has been restricted mainly to housing however we have started to see renovations of older walk up style unit complexes. The risk with these renovations is that if the body corporates are not in the position to do extensive works to the exterior of the building, it may detract from the renovation internally and therefore may not achieve the desired result.

The majority of renovations are being completed by owner-occupiers who want to create their dream home but are looking to stay in their current location which may be close to schools or the beach. Investors on the other hand choose to complete renovations to maximise their returns with the added bonus of depreciation for tax purposes. One of the risks for investors is that they may over capitalise and therefore not obtain the desired returns.

We have seen over the past 12 months that well-presented properties with good quality renovations are attracting a premium, as purchasers are looking to move into these properties with nothing to do. However, these properties have mostly been along the coastal strip where demand outweighs

supply. One example in Buderim was a property purchased for around $650,000. The owners undertook a reno of approximately $150,000 with the renovation improving the layout of the floor plan and targeting the big ticket items such as the kitchen and bathrooms. On completion the property is anticipated to obtain $850,000.

When looking at the hinterland townships, renovation and more importantly extensive renovation become harder to predict as these areas are not keeping pace with the coastal areas and therefore the cost to complete may not add the same value to the property. These types of renovations are done as a lifestyle choice rather than an economic decision.

RockhamptonUnfortunately the adage of renovating for profit is not applicable in the Rockhampton residential market at present. Although there is some positivity in the air, this has not filtered through to sound evidence of a residential market on the march. Hence, what we are witnessing in this market is that most renovations are done by owner-occupiers renovating to make their home more comfortable to live in.

The typical profile of these owner-occupiers are those who have owned their home over a long period of time and now have access to equity, or those with access to enough cash for the renovation.

The homes themselves tend to be older Queenslanders or mid-high set dwellings. The older houses are favoured by owner-occupiers who use the lower price point of a renovator as entry into the market with a view to improving or extending at a later date.

Very little renovations are being done to units at present. The added benefit of renovating a unit in this market just does not add up.

Houses which fit the bill for a renovation can be found in any of the older suburbs, however prices do vary and the more premier suburbs such as The Range, Wandal and parts of Allenstown are fetching prices in the low to mid $300,000 range. These are generally purchased by owner-occupiers. Investors tend to enter the market at lower price points with some recent sales fetching mid $150,000. These sales have occurred in the suburbs of Depot Hill, Park Avenue and Berserker.

There is very little recent evidence to demonstrate that the added value of a renovation is equal to or greater than the cost of the renovation. The marginal benefit in terms of value by extending a dwelling through addition of an extra bedroom or a deck is greater than that of upgrading a kitchen or bathroom. However, in this market, it’s highly unlikely that either will improve the value of the dwelling by more than the cost of the renovation.


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In essence, the focus of renovations in the Rockhampton area has been more on improving the comfort level and utility of the dwelling followed by improving the marketability of the dwelling, rather than renovating to make a profit.

GladstoneIn years gone by, renovating a house in Gladstone has been a risky venture. More often than not, in the space of time a property owner was completing renovations, the market was still dropping and once renovations were complete, the property was worth the same if not less than prior to the renovations being completed. Needless to say, very few property owners have completed major renovations over the past few years. In most cases in the current market, minor renovations will increase the marketability of the property however will not add value anywhere near the cost of the renovations.

BundabergLike most of Australia, purchasing a fixer-upper and renovating is a popular past time in Bundaberg. A common consideration for property purchasers during the decision making process is what value adding changes could be made to the property. There is no substantial evidence that suggests the renovating revolution is dominated by owner-occupiers or investors as both types of purchasers are reasonably active within the Bundaberg property markets.

The Bundaberg market has a relatively low buy-in cost compared to other locations around the country, with no particular localities within Bundaberg appearing to be attracting a renovation revolution. This is due to the absence of any significant capital growth within the Bundaberg market over the past five to ten years. It’s difficult to affirmatively state that major renovation works in the current market would result in an overall profit for the renovator.

At present, a popular choice for renovators is to purchase a low end investment property to renovate in order to increase the rental income potential of the property. A common mistake amongst renovators is over capitalising. A good tip for renovating in the Bundaberg market is to only put into the property what the market will return to you. This will avoid over capitalising and potentially losing hard earned dollars. Get advice from a qualified property valuer on what your market would judge as over capitalising.

MackayAt present we are starting to see a market for well renovated product, which can be anything from low set 1950s cottages to high set butter boxes right through to 1970s and 1980s brick dwellings getting the full modernisation treatment. The price point for these renovated properties is around mid $300,000s up to mid $400,000s. There have been sales over the mid $400,000s however these are usually larger dwellings and renovated to a high standard.

The key to this market is price point. The majority of renovated dwellings hitting the market were purchased during the downturn, when older style cottages in need of TLC could be had for low $200,000s or less. Purchasing dwellings at this price then allows full renovations to be realised and generally the cost of these renovations can be recouped at resale. We have also seen semi modern dwellings built in the 1970s to 1980s being purchased, then fully renovated and returned to market. Again, these dwellings are able to be renovated and presented to market generally at prices just below new dwellings.

Hervey BayRenovations in the Fraser Coast region are becoming more popular for home owners looking to increase equity in their home. Over capitalisation is always an issue with renovations. Owner-occupiers are the main drivers in renovations as investors look more towards new product housing where maintenance and operating costs are lower. The Hervey Bay market is generally seen as affordable and has a supply of circa 1970 to 1990 homes of varying styles, most of which are ready for some form of refurbishment.

For owners with the intention of turning over renovated dwellings quickly for profit, these are the more basic renovations with new floor coverings, window furnishings and a new coat of paint. This increases the appeal for minimal cost, however returns can also be minimal. For owner-occupiers


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looking to occupy the home for some time, a thorough renovation is more appealing. These renovations include new kitchen and bathrooms and look to increase the living area by either enclosing a built in garage to a rumpus room or another bedroom.

Some homes however are not suitable for renovation and a considerable renovation budget could lead to nominal return or a loss. For example, attempting to modernise the 1970s high set hardiplank is difficult and over capitalisation can occur quickly with this style of home. Also poorly finished DIY work that is not fully completed can negatively impact appeal and subsequently returns.

The unit market has suffered over the past five years due to oversupply and limited demand. Refurbishment of units for a quick profit is limited as a consequence of the oversupply and most renovations in units are by longer term owner-occupiers updating fixtures and fittings.

EmeraldRenovating is an option worth considering in Emerald. This has not been the case over the past five years as the market was continually dropping

and the added value in the market was less than the cost of renovation works. However when the market in Emerald is on the up it’s often been worth considering renovation. At present good quality homes have firmed slightly in most areas, however poorly presented homes or properties where maintenance is required are still seeing depressed sale prices and bargains are still available. These properties are best suited to renovation work when you look at how much stronger a neat well presented property is selling. Most people who have purchased in the past eight years up until 2016 have no equity to borrow to renovate so this could only happen from cash saved up. Those purchasing or those who have purchased in the past six months in the sub $200,000 price range are best placed to consider renovating as the cost to renovate is more than likely going to be covered in added value to the property.

WhitsundayRenovation is not widely practised in the Whitsunday area at this point of time. There will however be quite a bit of renovating in the Whitsundays as property owners begin to undertake repairs of damage caused by Tropical Cyclone Debbie.

Although there was positivity in the air prior to Tropical Cyclone Debbie, the market has quietened for now however it is expected that this will change in the short term. Previously most renovations were undertaken by owner-occupiers renovating to make their home more comfortable to live in.

TownsvilleA subdued building market coupled with a soft property market over the past few years has seen an increase in renovation. It would appear that instead of owner-occupiers selling and buying in the current market, in some instances they are opting to engage readily available tradespeople to undertake extensions and renovations.

The renovation market is typically dominated by owner-occupiers, however we have seen the occasional house flipper in this sector over recent times. The older established suburbs within a five to ten kilometre radius of the city prove the most popular for renovators and are most likely to benefit from renovation compared to properties located in the outer suburbs.

Typical renovations being undertaken include new kitchens and bathrooms and painting. We’ve also seen a number of extensions, adding additional bedrooms or bathrooms. This type of renovation has become highly competitive over recent years due to the availability of tradespeople seeking work, a scenario very different from a number of years ago when the traditional building market was much stronger.

Overall, while the median house price remains soft, the cost of borrowing remains low and the building market remains subdued, we are likely to continue to see renovations occurring.


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CairnsWith new housing construction and development remaining quiet in Cairns, renovation is providing a modicum of activity helping sustain the local building industry. Most renovation appears to be carried out on behalf of existing owners rather than new purchasers or investors and is carried out for a variety of reasons including refurbishment, modernisation and extension. Motivation for renovation also reflects some aversion in the current market to selling and upgrading due to the transaction costs involved on top of the price differential. Renovation for pure profit, with a view to renovating and on-selling is difficult in the current market due to the low profit margins likely to be achieved.

Although renovation is widespread throughout Cairns the more popular areas appear to be the older near-city suburbs such as Parramatta Park, Edge Hill, Manoora, Manunda and Westcourt.

Parramatta Park for instance has experienced significant renovation activity in recent years based on the modernisation of its older style Queenslander dwellings. This also reflects the character precincts in place in much of Parramatta Park which limits demolition and rebuilding activity. By way of example, renovated Queenslanders in Parramatta Park currently command a market range typically of $450,000 to $600,000, compared to a typical market range of $350,000 to $450,000 for unrenovated dwellings.


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AdelaideThe Adelaide housing market is made up of a variety of housing styles, with different sectors having different levels of suitability for renovation. Housing stock in the inner city that was built in the 1800s is generally well sought after if it’s need of renovation. There are many small stone fronted cottages on small holdings that appeal to younger purchasers intending to owner-occupy as a first home while enjoying the benefits of inner city living. This trend extends into the inner eastern and inner southern suburbs. Suburbs such as Norwood, Parkside and Unley provide good opportunities to buy and renovate older housing stock.

Housing stock slightly further out from the CBD, for example 3 kilometres to 8 kilometres from the city, tend to be of houses built in the mid 1900s and can be wartime or post war construction when building materials were in short supply. This has resulted in housing stock that is often borderline as to whether buyers might renovate or replace. The risk in this market is that buyers place too much value on the existing structures and over spend on renovating and maintaining a weak fundamental structure, when replacement might be a better option. This middle market is where investors tend to get involved. There is strong demand for corner sites where the rear garden is of a size that it can be divided to create a new building block, while the original house is renovated. Margins for renovators and developers

in this market are tight due to competition however demand remains strong due to market strength and generally safe capital growth.

Outer suburban markets are not safe for investor renovators due to limited capital growth and uncertain demand. Recent sales statistics are showing that capital growth in value of housing stock in the outer suburbs is very slow. This tends to leave this market for owner-occupier renovators where the intent is to buy well and renovate for longer term occupancy.

Classic renovation activity is remodeling a house floorplan to provide an open plan kitchen and family room on the rear of a house that otherwise has an adequate number of rooms in the original house to provide bedrooms and wet areas. The Adelaide market is one that does not provide a high level of real uplift in value and carries some risk when the cost of construction, time to develop and statutory charges are taken into account. Astute developers can make things work towards a profit, although for the novice it doesn’t take much for potential profit to evaporate. It’s also important to get the cost and quality balanced and in line with market expectations in any area. It’s difficult to generalise, however as a rule of thumb the closer the property is to the city, and to the beach to a degree, the higher quality of renovation is advisable. Therefore, in the inner city and suburbs like Norwood, Fullarton, Parkside,

Wayville and North Adelaide, it’s wise to provide high quality and well thought out renovations and generally the expense can be recouped with profit.

Mount GambierThe renovation market in Australia is estimated to be worth over $31 billion. With low interest rates and high employment certainty, it’s a good time to renovate. Renovations within the Mount Gambier region have been relatively popular and are generally dominated by owner-occupiers. Many of the renovations within the area are by existing or new owners on ageing houses.

Older character homes on larger allotments are commonly sought after by those wanting to buy to renovate within Mount Gambier. These houses are often situated close to town in highly sought after locations.

As you move further away from the CBD, locations and properties are less sought after. Properties located a further distance from the CBD are predominantly newer, modern subdivisions with less renovation potential.

Renovations generally include an upgrade to the kitchen and bathroom and often include the addition of an extra bedroom, en suite, second living area and alfresco or pergola area.

Within the Mount Gambier region we do not see a large number of unit renovations, however when we


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do they are usually basic renovations of an upgrade to the kitchen and bathroom. Strata laws often restrict units from being extended.

Some of the most popular streets for renovations in Mount Gambier include Bay Road, Ferrers Street, Elizabeth Street, Reginald Street, Jardine Street, Lake Terrace West, Bertha Street, Chute Street, Agnes Street, Park Terrace and Mitchell Street. Below are a number of properties that have been renovated.

6-8 Mitchell Street

This property sold for $370,000 in 2013. Since purchase, the owners completely renovated the property including a new kitchen, bathroom, en suite and laundry. The property sold again in 2016 for $760,000.

16 Vansittart Road

This property sold for $90,000 in 2015. Since purchase, the owners completely renovated the property including a new kitchen, bathroom and laundry. The property sold again in 2016 for $190,000.

It is easy to over capitalise in some areas of Mount Gambier such as the housing commission areas. It’s beneficial to complete basic renovations on these properties, such as kitchen and bathroom upgrades but major renovations on these properties may cause over capitalisation.


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Throughout the Tasmanian property market renovation is a popular pastime, as many houses and units have become dated and in need of an update. With the increase in demand for properties throughout the greater Hobart and Launceston regions, we are seeing many home owners who are looking to place their property on the market, either renovating their property prior to sale, or placing it on the market with an advertisement description outlining the property’s renovation potential for both the investor or owner-occupier. The term flipping properties has also become quite common in our market. Many property investors are looking to make a quick profit from purchasing a property with the intention to renovate over a six to 12 month period, then placing it back on the market at a considerably higher price than the original purchase price.

According to the latest figures home renovations have surged which has been inspired by the competitive housing market. There have been reports from the financial and housing sectors which have noted an increase in people opting to renovate instead of buying a new house. The latest Westpac Home Ownership Report noted, close to half of the respondents were thinking about going down the renovation path and one out of five had started to renovate. The report noted that in Tasmania 71% of respondents were completing renovation work at the time, and from those thinking about renovating in the near future, 23% advised it was their highest

priority. The Housing Industry Association Tasmania in its latest Renovation Roundup report mentioned renovation activity in Tasmania was forecast to increase between now and 2020, which will bring the value of renovation activity to $758 million. The report also mentioned the largest rise was forecast for this year with approximately 6% growth.

Both in the north and south of the state we are seeing a split between owner-occupiers and investors. Investors do seem to be on the increase and there is a strong possibility investors will dominate the market, especially with the increase in property prices throughout mainland Australia, which could drive investors to Tasmania. We are also seeing that rising prices and strong demand for property has home owners worried about being priced out of the market, therefore they are opting to renovate.

The most popular locations for renovatable properties are within the suburbs located closer to the Hobart and Launceston CBDs as they are still at an affordable price. Also with the increase in year wide tourism throughout the state, we are seeing many properties renovated in order to be advertised for short term accommodation through Airbnb and Stayz.

As you travel further from the Hobart and Launceston CBD, there is a decrease in demand for properties.

The main renovations being completed are kitchen, bathroom and painting throughout. We are seeing varying costs for this renovation work depending on the location of the property. The closer a property is to the CBD, there is a noticeable increase in architecturally designed renovations which increases the over cost of work.

Unit renovation is also quite common throughout the state as many units are also dated and in need of an update. With generally less costs associated in renovating a unit, there is strong appeal to complete these works. Units closer to the CBD are in high demand with a current shortage in supply which is attracting many investors to the units advertised for sale.

Areas at a distance and not within the greater Hobart and Launceston areas can struggle when it comes to making a profit post renovations, as there is considerably less demand for properties in these areas. In saying this, had renovation work not have been completed in these areas, the properties may experience an extended selling period. It pays to do your research prior to commencing any renovation work as what can appear to be a simple renovation job can quickly lead to unexpected issues and delays which can prove to be quite costly. To assist with planning and budgeting home owners should take steps to determine the estimated available equity in their property.


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Darwin2017 has brought a continued softening in the property market for Territorian home owners across the board, however renovating is still seen as an attractive option for many. This can be partly attributed to local government incentives put in place from February 2017. First home buyers can take advantage of the Home Renovation Grant which provides a voucher worth up to $10,000. The Home Improvement Scheme offers another incentive to work on the property where a further $4,000 can be received (with at least half the job paid by the owner themselves for a total value of job of $8,000). The voucher is valid for renovation work costing up to $20,000.

A key renovation hot spot in the Darwin region is the northern suburbs. Located approximately nine kilometres from the CBD, this area has a large proportion of older houses (built from 1960 to 1985) and these dwellings provide a solid starting platform for those looking to renovate. The northern suburbs comprises predominantly owner-occupiers, with the purpose of renovation generally to upgrade their standard of living and hopefully increase the value of their property. Investors in the area generally renovate to protect the life of their investment, increase possible rental yields and decrease the amount of regular maintenance required on the property.

Entry level stock of very dated condition is available in this location for approximately $280,000 to $370,000. Renovations to this type of stock generally range from cosmetic changes such as a new bathroom or kitchen to extending or building under an established roof line. Renovated dwellings (depending on the level of upgrade and when the work occurred) can achieve upwards from $400,000. Another excellent upgrade-able option in this area is an elevated dwelling. While being characteristically Territorian in nature, this design offers good opportunities for extensions, with many owners building under and subsequently increasing the amount of bedrooms or bathrooms in the property. This type of renovation has the benefit of having the structure already in place and is therefore an economically viable option. Unit renovations are not as common however do occur in the northern suburbs. Upgrading the unit by increasing it from a 2-bedroom to a 3-bedroom is an excellent way to increase value as the unit will enter a slightly stronger sector of the market. This would benefit either investors or owner-occupiers, with stronger rental yields achieved or a possible capital gain respectively. Upgrading the floor coverings is another good option for first renovations as this greatly increases the overall appeal of the property. These renovations may be very difficult to achieve however due to body corporate constraints in place.

Looking further from Darwin, the rural residential area and Palmerston City follow a similar trend, with most renovations occurring to older dwellings by owner-occupiers to increase the standard of accommodation or dwelling size. Palmerston is a newer city than Darwin, with the majority built from 1985 onwards and therefore there is significantly less renovation work occurring. Most work is focused on the construction of brand new dwellings in suburbs such as Durack and Zuccoli. Generally older stock found in the original suburbs of Gray, Driver, Moulden and Woodroffe would be the main areas of renovation activity. An entry level property in this area can be purchased from $250,000 to $300,000 with renovated properties achieving values of $300,000 to $500,000 based on the amenity and location.

Home owners looking to renovate themselves can make significant savings, however this pathway can be fraught with danger. It is recommended for larger items such as extensions that all work is signed off by a certifier to protect against insurance hassle in the future. Darwin generally has higher trade costs compared to larger serviced cities, which does make it difficult for a profitable renovation to be achieved. Therefore work completed by the home owner as opposed to hired tradesmen is where significant savings and profit can be generated. An area to be wary of for those improving their property is the differentiation between maintenance and renovation.


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While a new hot water system may be required to preserve the life of the asset, this does not necessarily transfer to an increase in value. Over-capitalisation can occur if this is the case, especially in the current economic climate.Another key limiting factor for renovations in the Northern Territory is centred on the significant costs relating to the removal and treatment of asbestos. This hazardous building material is present in almost all dwellings built before Cyclone Tracy and a fair proportion of dwellings built prior to 1986. This material is very costly to remove, and should only be handled by accredited asbestos removal professionals.

The residential property climate heading into the middle of 2017 for the Territory is a continuation of the depressed market values of 2016. Recent RELM figures have revealed a drop in overall sales volumes by 13.2% from the December 2016 quarter to the first quarter of 2017. Units are no different, with sales down 22.5% from the same period respectively and a continued over-supply and severe lack of demand. Those looking to enter the housing market still have ample opportunity, with median house prices and

unit prices down 10% and 14% respectively on last year’s figures. The Northern Territory government has recently been releasing surplus stock in the form of auctions which provide excellent opportunities for first home buyers looking for a renovation project. This calibre of housing commission stock can be purchased from as low as $280,000.

Alice SpringsIn the Alice Springs market, opportunities for renovating for sale are generally few and far between. This is due to the combination of construction and renovation as well as the market having been subdued for an extended period.

Not all is lost however, as there remains opportunities for the diligent buyer. The most common properties purchased for renovation are the ex Housing Commission dwelling stock that is released to the market via public auction, usually in sets of four or six at a time.

The price point for these can vary, especially with competing bidders on the day, however the last properties auctioned were in varying levels of condition and achieved between $205,000 and $310,000. These were all 3-bedroom, 1-bathroom detached single dwellings in established residential areas.

Significant works can be required for these properties but generally speaking, the typical requirements are full paint throughout, plastering,

new kitchens, bathrooms, windows, floor coverings and electrical works. This type of renovated dwelling achieves varying results, however can range from $400,000 to $435,000 depending on the standard of renovation.

Other opportunities in Alice Springs can now be found with older style circa 1980s 2-bedroom units which have seen significant drops in value levels over the past three years, in some cases 30% or more. Entry level to this segment is now at less than $200,000, in some cases for units that not so long ago were achieving high $200,000s.


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PerthThe Western Australian economy has been haunted by a lack of consumer confidence over the past couple of years, hence home owners have utilised a high degree of caution when it comes to upgrading or extending their homes. Similarly, the prospect of paying stamp duty in a subdued economy has stalled transactions of established dwellings unless the product is highly desired by the market.

The problem with undertaking a renovation project in a subdued market is that there is always a risk that the expenditure will not reflect a direct increase in capital value. This has definitely been an issue in the Perth residential market in previous years and also extends to the new housing market. The issue is however exacerbated in the established housing market given the proportionately higher costs involved in extension or renovation works. As an example, new construction typically occurs for rates of $1,000 to $1,500 per square metre of living area. In the situation of an extension or renovation, these rates quite commonly start at $2,000 and rise rapidly towards $3,000 per square metre for single level properties.

Hence in the current market, decisions made to extend or renovate are most often based on emotional choices rather than financial common sense. They commonly occur with families in well located, established areas offering little housing variety, where the location is not willing

to be sacrificed regardless of the cost of the works involved to transfer the dwelling into something more modern and comfortable. In the current market, undertaking such a project in an outlying, potentially less desirable area is likely to be particularly challenging.

We have seen several investors follow the flip method and come unstuck, either due to the higher holding costs associated with longer selling periods or by simply mis-timing the market and the market corrects downwards as money is invested into the project. Hence these projects are not for the faint hearted.

Some typical areas that are still seeing a decent level of extension or renovation work include Duncraig in the north where a renovator’s delight can be obtained for a little over $500,000, but well renovated properties can achieve in the $800,000s. The suburb is well located, being close to the coast but with good transport links to the CBD.

An example in the south is Parkwood, where entry level housing sits at around $400,000 and good product can nudge past $600,000. The area offers little variety of housing but is well established with good sporting, shopping and employment centres in close proximity.

Also in the south, the suburb of Melville has seen a significant amount of redevelopment along with restoration of the original cottages. The suburb is

garnering interest due to its proximity to the Swan River and Fremantle and proximity to more upmarket and sought after suburbs such as Alfred Cove and Attadale.

Entry level is not far above $500,000 and well renovated and extended properties can attract into the $800,000s. All in all, we would urge caution for any home owner considering undertaking an extension or renovation project in the current market place. It would be wise to speak to multiple builders to ensure you are getting the most competitive quote and seek the advice of a local property valuer to ensure that you understand the risk and reward equation prior to committing to anything.

South West WAThe renovation revolution has yet to reach the south west of Western Australia.

Yes, there have been some renovations and additions to properties in the older character areas such as Bunbury, South Bunbury and East Bunbury where small character homes are renovated and extended to 4-bedroom, 2-bathroom homes.

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only minor increases in value above the cost of renovation. There appears to be very few smaller character homes being renovated without the extensions.

For example a 3-bedroom 1930s character home in South Bunbury can be purchased for as low as $275,000 to $300,000. A renovation and addition to the home could cost between $200,000 and $300,000 depending on the size and standard. The end value however could range from $500,000 to $600,000 showing very little profit.

With a plethora of new residential subdivisions surrounding the main cities and towns in the south west, the demand appears to be more for new dwellings. The values for new dwellings are also very competitive in relation to renovated homes.

The limited number of older character homes in the region means that the renovation revolution is unlikely to hit the south west.


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