Is it cheaper to buy new or renovate?
If it’s time to upgrade, you have choices to make. Whether you decide to buy or renovate a house, it’s going to take time, money and probably stress.
There are a range of reasons why it might be time to upgrade. It could be that you’re moving to increase the floor space to make way for a family addition, or maybe you are wanting to live in a nicer home. Whatever the reason, either option has pros and cons.
Why renovating is a good idea
Renovating can be a good option to save money, but it’s not the fastest option. If you have time up your sleeve and are flexible enough to live in a house that’s under construction, then this could be an option for you. This gives you the benefit of staying in the same suburb with the same neighbours, so your kids can remain in their school and continue their existing friendships.
How much does it cost to completely renovate a house?
It depends on the size of the house, the extent of the renovations, and what level of quality you’re aiming for. In general, for a full budget renovation it will cost about $1800m2, a mid-range reno is $2,500m2 and a high end renovation will cost anything upwards of $3,000m2.
This includes everything from paint and carpet to appliances and joinery, so there are some substantial savings that can be made. It’s rare that a home requires everything to be replaced, so there can be items such as fridges, ovens and some bathroom fittings that can be re-used and won’t affect the quality of your renovation.
You also need to consider is these renovations will add value. For every dollar you spend, you need to decide if it’s an investment that’s worth it. There are some things that increase the value of your home, and others that aren’t worth it unless you are intending to stay in the home for a long time.
Kitchens and bathrooms typically return $1.50 for every $1 spent. However, swimming pools do not add value as many people are not interested in these due to ongoing running costs.
The kitchen: One of the key changes in a kitchen is to bring in more seating space – and so a breakfast corner/island with bench space can begin at around $13,000. There are also the additional costs of cabinetry, designing and the labour that is involved. Full kitchen renovations of this nature begin at $40,000 depending on the materials you use and the designs being implemented.
Bathrooms: The bathroom is one space that usually tops the list of renovation projects for a home. A complete overhaul of a medium-sized bathroom can cost you between $20,000 and $35,000 – this is, if you plan to bring in a mid-range quality of fixtures. You can of course opt for something a bit more basic and this can be in the range of $15,000 to $20,000. The simplest way to keep your expenses down in a bathroom renovation is not to move the plumbing points around.
Another renovation that has a high value return is turning a three bedroom home into a four bedroom home. Typically, for each dollar spent on adding an extra room, you’ll double your money.
In terms of a budget, it can be monetarily a much better decision to extend your home, than invest in a larger house. On average, the cost of extending your home by 50SQM is between $100,000 and $150,000. This works out to a price of around $2000-$3000 per square metre. The difference in costs completely depend on the materials that are chosen for the job.
When should you buy a new home instead?
If, rather than renovating your home, you’d rather move, there are good reasons to do this. You can move to a different area/ school zone, size up your property, and you don’t have to worry about timeframes for construction/ renovation work.
But you will need a reasonable budget or space on your mortgage, the ability to sell your existing home and likely some expense when you move into your new home.
Renovation costs are often fluid, especially in bathrooms and kitchens where water damage could become apparent or when electricity/ plumbing needs to be moved. Whatever renovation budget you have, add 15%- 20% onto it to be realistic. When you buy a new home, you know the costs involved and they are less likely to change.
So should you buy or renovate a home?
The final choice is up to you, your budget, and your timeframes. If you can handle disruption and the likelihood that the budget and times will change, then a renovation is the best option. Make sure you use qualified, trained builders that you can trust.
If you don’t mind moving from your suburb, have enough breathing space on your mortgage for an upgrade and are confident in your existing home selling, then maybe you can confidently buy a new home.
The choice is up to you, but whatever you do, do it properly. You’ll have to live with the outcome for a long time.