Your home’s getting a little too small and old but you’ve put down roots and you don’t want to leave the area. When you run into this common conundrum is it better to tear down your home and rebuild it, or just renovate?
THE PROS AND CONS OF KNOCKING DOWN AND REBUILDING
- Gives you the chance to completely shape your new home to fit your lifestyle.
- Can massively increase resale value.
- Everything will be new. That means fewer maintenance hassles, lower utility bills and more comfortable living.
- Usually requires a large financial and time commitment.
THE PROS AND CONS OF RENOVATING
- Gives you a chance to change the parts of your home you don’t like.
- Allows you to preserve the character of your home.
- Spend as much or as little as you want.
- May be faster and easier than a rebuild – you may not even have to move out.
THINK ABOUT YOUR LONG TERM FUTURE
Before you rebuild your home, you need to take a moment to think about what your long term plans are. Will you stick around for the long haul in your current home? Or will you upgrade to a better location when you can afford it?
If you’re planning on sticking around, a complete home rebuild may be your best bet. It’s usually a better long-term investment as it could increase your property’s resale value markedly. Remember, brand new properties in established areas are gold.
On the other hand, if you’re planning to up sticks and move in the next few years, rebuilding might not be worth the expense and the hassle. Renovating your home may be an easier, more affordable way of improving its liveability and resale value before you move on to greener pastures.
GET QUOTES FOR BOTH OPTIONS
If you can’t decide which option is best for you, find out the approximate costs of both to make the decision easier.
A builder should be able to provide you with a ballpark quote to knock down and rebuild, especially if you’re happy to go with a standard base plan. To give you a rough idea, the average building cost per square metre in Australia is $1,270.80 and the average home size is 251.7 sqm as of 2018, a total of $319,860 according to the Australian Bureau of Statistics.
Assuming you build the average Australian home based on those figures, you should expect to spend north of $300,000, not including extra costs. Your build may cost more or less depending on its size, complexity, finish and the site it’s built on.
If you’re also considering renovating think about what you want done, and speak to a renovation company or builder to get a quote. Once you have both cost estimates in hand, you’ll be better equipped to weigh the two options against each other.
DO YOUR SUMS
Now that you’re armed with two or more quotes, it’s time to do your sums. How much cash do you have to spend right now? Will you need to apply for a construction loan in order to rebuild? Do you need to refinance your home loan to pay for renovations? Your best bet is to speak to a mortgage broker to find out what your options are.
If rebuilding is going to stretch the limits of your bank balance, it’s usually best to wait until you’re in a better financial position to get started. Once you commit, you need to be sure you have the funds to finish, otherwise, you could be left with a half-finished home or an empty block of land.
Renovating is usually easier on the wallet. You can spend as much or as little as you want and stop work if the budget is getting tight. With that said, renovating your entire home can end up costing as much as rebuilding, especially if you have expensive taste.
CONSIDER THE MARKET IN YOUR AREA
Older character homes like Victorian villas stand out from other homes and often command high prices. New homes just don’t have those beautiful detailed ceilings or polished wooden floors.
If you live in an older property, renovating may be a better option to preserve character while making it more comfortable and refined. On the other hand, if your home is an ugly duckling where the worth comes mainly from the land it sits on, rebuilding should be an easy choice.
KNOW THE PROPERTY MARKET
If property in your area is in hot demand then rebuilding will often be worth the expense. This is usually the case in affluent areas close to the city with great access to amenities. In these areas, the cost of your rebuild will rarely exceed the value added.
On the other hand, in areas where properties are taking a long time to sell and prices are stagnant, you should be careful of spending too much on rebuilding or renovating. It may even be worth speaking to a local real estate agent about your plans to make sure you don’t overcapitalise.
There are so many things to think about when you rebuild or renovate your home, so do your homework, think about your long-term plans and get some expert help to make sure you make the right decision.