By Herron Todd White
At the time of writing, South Australia has registered only one new case of COVID-19 since 23 April and has become the first state to be free of any known COVID-19 cases. The containment of COVID-19 has allowed the state government to put into action its roadmap for easing COVID-19 restrictions which was met with open arms for those in the property industry. As of 11 May, restrictions were eased on the number of attendees at open inspections and allowing on-site auctions to take place. There is a sense of optimism in the air. In terms of the numbers, days on the market for metropolitan Adelaide currently sits at 54 compared to 45 during the same period in 2019 whilst listing volumes nationally have trended lower. Interestingly dwelling values have been resilient recording a 0.4 per cent increase over the month of April. Agents are reporting a similar story indicating that stock is hard to find however buyers are still active in the market.
The motivations of those active in the market must be well tuned when considering a renovation.What motivates one market participant to throw on the overalls and pick up a paint brush can be vastly different to the next.For owner-occupiers, a lack of space during working from home arrangements may have forced the hand to give a renovation project the green light whilst a minor renovation may make an investor’s rental property stand out from the crowd in a deepening rental market.
When undertaking renovations, owner-occupiers are willing to extend themselves to achieve a level of comfort and amenity required for a long stay. The thought process is spend now for what you want. In 20 years’ time, the cost becomes negligible and you have benefited in lifestyle from the works undertaken. Conversely, investors seek out properties with good bones that need as little capital outlay as possible. Put simply, owneroccupiers will attempt to fulfil both wants and needs whilst investors look to fulfil needs.
An example of this differential can be seen in the sales of 10 Dunks Street, Parkside and 42 Stamford Street, Parkside. Each comprises a character stone dwelling on an approximately 350 square metre allotment .Selling in April 2020 for $1.29 million and representing owner-occupiers, 10 Dunks Street, Parkside has been fully renovated and extended comprising high quality fixtures and fittings across three levels of accommodation. This property provides for the typical needs of a buyer and also the trimmings some in the market may want. Conversely and representing investors, 42 Stamford Street, Parkside is currently listed for rent asking $520 per week and has had the floors polished, walls painted and the kitchen and bathrooms updated to an appealing standard. This property has been brought to a standard acceptable in the market providing no more than the needs a potential occupant may seek.
Heritage restrictions and planning overlays catering to lower density development make the inner and middle rings ripe for those looking for a renovation project. The suburbs of Nailsworth, Kensington, Colonel Light Gardens and Mile End are each located within five kilometres of the Adelaide CBD and are characterised by early to mid-century homes on allotments ranging from 150 to 1000 square metres. Entry price points in these suburbs range between $450,000 and $850,000 with well-established and renovated homes ranging in price from $650,000 to $1 million plus.Ripe for a renovation is the current listing of 14 Phillips Street, Kensington, which has been advertised to the market with an undisclosed asking price.The property comprises a brick bungalow disposed as two bedrooms and one bathroom on a 453 square metre allotment.This property represents an entry level property in the suburb of Kensington.
Renovating does not solely relate to detached dwellings. Strata units are popular with first home buyers and investors given the entry price point they provide. The restrictive nature of a Strata Title means renovations can only take place within the four walls of the unit. This can be a good starting point for first time renovators as one can get a taste for the process whilst being limited in the extent of work that can be undertaken. Strata units are typically found in suburbs established between 1960 and 1970 and are characterised by cream brick walls and terracotta-tiled roofs. The Burnside council area in the metropolitan south-east is heavily populated with strata units.Entry price points throughout the council area range between $225,000 and $325,000 whilst renovated units become available in the high $200,000s and can push up to the low $400,000s at the top end of the market.
A representation of an entry level property is the sale of 10/1A Grant Avenue, Rose Park which achieved a sale price of $263,500.This property comprised a first floor unit disposed as two bedrooms and one bathroom providing original fixtures and fittings throughout.The property is well located being only a short walk to Victoria Race Course and Adelaide Parklands. The upper end of market parameters is represented by 6/3 Talbot Street, Erindale which achieved a sale price of $430,000.This is a fully renovated, free standing unit comprising two bedrooms and one bathroom. The unit has a double carport and private courtyard.
When considering a renovation, construction costs and materials can be a topic hotly debated over the dining table.Construction costs appear to have remained stable over the past 12 months.Costs can fluctuate depending on building size, quality and specification.Tastes in building materials continue to evolve with free-standing baths and glass window kitchen splash backs becoming popular. Brick veneer and rendered hebel construction remain most common for extensions whilst vinyl timber flooring and stone bench tops have become standard inclusions.
With an uncertain sales market we may in the short term begin to see a trend where home owners renovate what they have instead of seeking something else.This coupled with record low interest rates may provide the perfect excuse to get a project moving.
Speak with an Adelaide Mortgage Broker today.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.