It’s the burning question homeowners of a certain age face — sell and upgrade or stay and renovate?
Exclusive analysis by comparison site, Compare the Market, reveals it costs at least $53,500 to sell a home in Brisbane once stamp duty, legal fees, and agent commission are considered.
Depending on the scale of the renovation project, a cosmetic renovation could set you back about $33,000, but an extension for just one room could cost upwards of $250,000.
Should you stay and renovate or sell and upgrade? That’s the question. Picture: Supplied.
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The latest Australian Bureau of Statistics data reveals the average loan size for a renovation project in Queensland was most recently a little over $200,000.
“It really depends on the scale of the building project,” Compare the Market property expert Andrew Winter said.
“For example, if you need to add a lot of extra rooms/space, it may be cheaper to move, especially if you’re happy to consider moving to a fringe suburb where bigger homes are more affordable.
Real estate guru Andrew Winter is Compare The Market’s property expert. Image: Luke Marsden.
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“If you’re just looking for a cosmetic upgrade, you may well be better off giving your kitchen/bathroom a facelift, as costs associated with moving can be upwards of $50,000.”
Top Build Group director Mitch Reardon charges $4666 per square metre to do a renovation. For a client looking to add just one extra bedroom to their house, he charges about $80,000.
A recent project in Tarragindi involved an 80 sqm extension, including two bedrooms, a walk-in robe, en suite, laundry, and rumpus room, which cost his client $328,000. The median house price in Tarragindi is $1.5m.
HIA figures show the cost of renovating has gone up 54 per cent in Brisbane since 2019.
MORE: Renovation nation: five of Brisbane’s best home makeovers
However, a really big renovation, like the one he just did on his own property in Geebung, where the median house price is $1.04m, would cost between $1.2m and $1.4m, Mr Reardon said.
“It’s definitely getting to a point where some people are spending as much as they paid for the house originally on renovating it,” Mr Reardon said.
DIY friends and renovation team, Holly Docherty and Angie Lonergan from @renogals, have renovated five properties across southeast Queensland, and just put their most recent project at 9 Moorabinda St, Buderim, on the market.
Holly Docherty and Angie Lonergan are best friends who nurse and nanny by day, but spend their free time renovating homes. Photographer: Liam Kidston.
Ms Docherty said they were looking at buying a renovator in Wavell Heights, where the median house price was $1.4m, and adding an extension or raising the house, and two builders recently quoted them about $5000/sqm.
“The price between unrenovated properties and renovated has narrowed over the past five years, so I feel like there’s very little difference jumping from three to four bedrooms, so it might actually be cheaper to sell and buy something bigger,” she said.
Ms Docherty said the cons of renovating were the cost of moving out or living through the mess, and the risk of overcapitalising, but the pros were that it provided a level of customisation, and you knew your neighbours.
“The benefit of selling is that you may be able to reduce your debt and buy back in (to the market) with no debt, but the cost of selling and buying back in is huge now because house prices have gone up so much and the stamp duty is astronomical,” she said.
| LOVE IT OR LIST IT? | |
| What it costs to “List it” | |
| *Stamp duty for a median Brisbane house | $27,900 |
| *Real estate agent commission of 2-3 per cent | $18,600 – $28,000 |
| *Advertising costs | $4600 minimum |
| *Legal conveyancing costs | $1,000 – $2,000 |
| *An auctioneer | $500 -$1000 |
| *Lender discharge fee | $300 and $1000 |
| *Removalist costs | $600 for 3 hours |
| Total | $53,500 |
| What it costs to ‘Love it’ | |
| *Cosmetic kitchen reno | $15,000 |
| *Custom kitchen reno | $50,000 plus |
| *Basic bathroom reno | $18,000 |
| *Luxury bathroom reno | $35,000 |
| *Adding an extension | $250,000 plus |
| Source: Compare the Market |
Mr Winter said it would likely cost a bit more than the median house price of just over $1m to buy a four or five-bedroom abode in Brisbane.
“The problem with that is bigger homes now cost a lot more to buy, and thanks to rising supply and labour costs, renovating isn’t cheap either, leaving a lot of people between a rock and hard place,” he said.
Housing Industry of Australia (HIA) figures show the price of the typical existing home across Queensland is at least 80 per cent higher than it was in 2019, while the cost of a typical renovation project has gone up about 54 per cent.
The cost of a new build has also skyrocketed. Labour and building materials costs are 35 to 40 per cent higher than in 2019, comparable to renovations costs.
But the price of a residential lot is about 60 per cent more expensive in Brisbane, 80 per cent dearer on the Sunshine Coast, and a whopping 150 per cent more costly on the Gold Coast.
“So, renovations can be a much more affordable alternative to buying another new or existing dwelling,” HIA senior economist Tom Devitt said.
Tom Devitt – HIA Senior Economist.
Recent research by HIA and the Centre for International Economics (CIE) shows 41 per cent of the cost of a house and land package in Brisbane is due to government taxes, fees and costs.
“Renovations on an existing home can potentially avoid a lot of this, especially the components associated with policy-inflated land costs,” Mr Devitt said.
“There’s also an ongoing desire from the pandemic for greater space and amenity in one’s living environment, giving the ongoing working-from-home phenomenon, which can be easier to achieve with a renovation than trying to find the exact desired living environment in a new home.”
Avi Khan, principal of Ray White Daisy Hill – AKG. Image supplied.
Ray White Daisy Hill and AKG principal Avi Khan said his team was seeing a rise in homeowners choosing to renovate rather than sell — even if they had significant equity gains in their properties.
“Unless a homeowner is upsizing significantly or relocating to a more affordable area, those potential gains can quickly be eroded,” Mr Khan said.
“Some owners are also hesitant to buy and sell in the same market, especially with uncertainty around interest rates and supply.”
Mr Khan said “smart renovations” were becoming a “serious wealth building strategy” given construction costs were stabilising and demand was still strong in many suburbs.
“We’re just as busy giving homeowners market advice on post renovation value as we are appraising current homes for sale,” he said.
“The key is knowing your numbers. Overcapitalising is a real risk as not every renovation delivers the return a home owner will be expecting.
“What we have found is that for most homeowners, it’s not just about selling or renovating, it’s about getting closer to the lifestyle they want and making sure their money is working hard for them.”
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