Buyers chasing ‘picture perfect’ properties

The September Herron Todd White Month in Review looked at the springtime renovation market across Australia and found the continued rise in building expenses had made buyers wary of renovating. Darwin-based Herron Todd White valuer, Jeremy Callan said un-renovated properties were quickly becoming less sought after in the NT’s capital city. “Over the past 12 months we have seen the emergence of a two-tier market, where the gap between un-renovated and renovated homes continues to widen,” he said. “Demand for un-renovated homes continues to reduce (and) part of the reason behind this is the cost of renovations. “As the overall cost to construct a home has risen locally by approximately 30 per cent overall since 2020, renovation costs have followed suit. “With the lack of skilled trades and increase in the time to complete/construct, the appeal of a turnkey ready product has only risen, with renovated homes in the popular northern suburbs always a target for buyers.” Mr Callan said fully renovated homes, particularly in the inner and northern suburbs were highly sought after and achieving strong results, even after successive interest rate rises. For example, a fully renovated elevated home at 8 Croker St, Nakara, sold for $1.1m in early 2023, setting a suburb record. “Over the past 12 months it has been noted that some owners are electing to walk away from contracts or renovation works and elect to buy a completed product, resulting in some un-renovated homes having drawn out days on market and some price reductions to meet market expectations,” he said. MORE NEWS: Pools, pets and patios: what NT home hunters really wantWant to know this home’s secret? It will cost you $2.5 millionBuyers can be choosers with listings on the up“Profiting or flipping homes can also pose issues. “Turnaround times on delivery of construction, cost of renovations, holding costs with finance now at interest rates over six per cent and lack of trades have made this option, for most, limited. “For this option to become more feasible locally, an injection of qualified trades, cheaper finance and reduction in material costs would be needed.” Herron Todd White director, Janine Rockliff, said across the country many buyers were shying away from building new homes due to cost. “Construction costs continue to rise,” she said. “Trade shortages are the main driver; material supply seems to have stabilised for now.“The prediction is cost rises between eight and 15 per cent across the country and this is on top of the cumulative effect of the increases since the introduction of the home builder grants, other government incentives and supply shortages. “For example, in the regional locality of Beaudesert which is an hour from the Gold Coast and Brisbane, a standard project style, turnkey four-bedroom, two-bathroom, double lockup garage dwelling with a gross floor area of just under 200sq m cost $205,000 or around $1060 per square metre in 2019. “A similar house is now $366,000, or $1725 per square metre.“Purchasers are wary of signing new construction contracts with cost increase clauses and a high proportion of provisional sum and prime cost amounts.” Ms Rockliff said buyers were also concerned about the liquidity of builders, with Victoria, Queensland and Western Australia experiencing several construction company collapses, while securing a builder able to start within a reasonable time frame to reduce holding costs was also a challenge. “This continues to drive the market to seek new or recently constructed homes and pay a premium for not having to go through the stress of a new build,” she said.

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September 29, 2023 at 12:30AM
The September Herron Todd White Month in Review looked at the springtime renovation market across Australia and found the continued rise in building expenses had made buyers wary of renovating. Darwin-based Herron Todd White valuer, Jeremy Callan said un-renovated properties were quickly becoming less sought after in the NT’s capital city. “Over the past 12 months we have seen the emergence of a two-tier market, where the gap between un-renovated and renovated homes continues to widen,” he said. “Demand for un-renovated homes continues to reduce (and) part of the reason behind this is the cost of renovations. “As the overall cost to construct a home has risen locally by approximately 30 per cent overall since 2020, renovation costs have followed suit. “With the lack of skilled trades and increase in the time to complete/construct, the appeal of a turnkey ready product has only risen, with renovated homes in the popular northern suburbs always a target for buyers.” Mr Callan said fully renovated homes, particularly in the inner and northern suburbs were highly sought after and achieving strong results, even after successive interest rate rises. For example, a fully renovated elevated home at 8 Croker St, Nakara, sold for $1.1m in early 2023, setting a suburb record. “Over the past 12 months it has been noted that some owners are electing to walk away from contracts or renovation works and elect to buy a completed product, resulting in some un-renovated homes having drawn out days on market and some price reductions to meet market expectations,” he said. MORE NEWS: Pools, pets and patios: what NT home hunters really wantWant to know this home’s secret? It will cost you $2.5 millionBuyers can be choosers with listings on the up“Profiting or flipping homes can also pose issues. “Turnaround times on delivery of construction, cost of renovations, holding costs with finance now at interest rates over six per cent and lack of trades have made this option, for most, limited. “For this option to become more feasible locally, an injection of qualified trades, cheaper finance and reduction in material costs would be needed.” Herron Todd White director, Janine Rockliff, said across the country many buyers were shying away from building new homes due to cost. “Construction costs continue to rise,” she said. “Trade shortages are the main driver; material supply seems to have stabilised for now.“The prediction is cost rises between eight and 15 per cent across the country and this is on top of the cumulative effect of the increases since the introduction of the home builder grants, other government incentives and supply shortages. “For example, in the regional locality of Beaudesert which is an hour from the Gold Coast and Brisbane, a standard project style, turnkey four-bedroom, two-bathroom, double lockup garage dwelling with a gross floor area of just under 200sq m cost $205,000 or around $1060 per square metre in 2019. “A similar house is now $366,000, or $1725 per square metre.“Purchasers are wary of signing new construction contracts with cost increase clauses and a high proportion of provisional sum and prime cost amounts.” Ms Rockliff said buyers were also concerned about the liquidity of builders, with Victoria, Queensland and Western Australia experiencing several construction company collapses, while securing a builder able to start within a reasonable time frame to reduce holding costs was also a challenge. “This continues to drive the market to seek new or recently constructed homes and pay a premium for not having to go through the stress of a new build,” she said.