Why you don’t need to be scared of a do-up right now
Through a combination of tracking the property sales in my area and chatting to local realtors, it’s become clear that homeowners
are not looking to buy do-ups right now.
In fact, one agent said to me that naive buyers who thought a renovation might cost $100k a year ago are assuming it costs $500k today thanks to what they’re seeing in the news about the construction industry (hint: prices haven’t really increased five times).
Here are a few reasons why you don’t need to be scared to buy a do-up right now.
You should live in it first
This advice is as old as time –always live in the house for at least six to 12 months before making any drastic alterations – things such as layout changes (removing or repositioning walls), shape and orientation of kitchen and living, layout of bathroom and so on. Every house is different and it will take a while for you to adjust to the new layout and figure out what is and isn’t working for you.
By time you’ve done this, the cost of construction might be starting to stabilise. Buying a do-up doesn’t mean you have to renovate it right now.
Consenting takes a while
If you are planning to renovate, the design and consenting process takes quite a while. Registered architects are under the pump right now so you could easily wait up to three months just to get the design underway. By the time the concept is approved and developed to a consentable level, including waiting for engineering if required, it could be six to eight months before you’re ready to lodge the building consent with Council, and if you need a resource consent too (hello, heritage homeowners), then you need to go through that process twice. Once into Council, the approval process can take anything from one to three months.
Taking that into consideration, by the time you’re ready to renovate, the cost of construction might be stabilising and the beauty is, you’ll be able to hit the ground running with your stamped consent documents.
Don’t believe the hype
Yes, the cost of construction has increased, but not by five times.
Like anything, costs are dictated by supply and demand. There was an increase in demand as a result of a series of lockdowns in which homeowners identified all the things they hated about their property after being stuck in it for long periods of time isolated from the world – and they identified things they immediately wanted to change.
Couple that with supply issues because companies closed down for months at a time, including manufacturing; and you’re definitely going to be paying a premium. Gib is a perfect example of this,
but 12 months or so on they’ve just about caught up and the wait isn’t too unreasonable.
The good news is, if you’re organised enough to know all of your fixtures and finishes, then these can be ordered well ahead of time. This means you aren’t paying a premium for something you needed yesterday that now has a six-month lead time.
You’ve got less competition
Think about it, if the majority of buyers in the market right now are put off buying do-ups because they think renovation is extraordinarily expensive, then who are you going to be competing with on auction day? Yes, auction day. Despite so many properties being passed in and moving to price by negotiation, most vendors are still trying auction first because cash unconditional is the goal. If you’ve done your due diligence and have finance lined up, then you’re good to go on auction day when others might be waiting to negotiate a conditional purchase.
That is, if your bank will lend on the property – sometimes that’s actually the reason do-ups suddenly stop selling on the market. Buyers think it’ll be too hard, and banks won’t lend on them anyway.
The market will stabilise
“This too shall pass.” There was definitely a period of time in 2021 where it seemed like I was literally receiving weekly emails from a well-known building materials suppliers listing all of the price increases in the pipeline. This has definitely faded away and, like anything, it will eventually stabilise.
The last graph I looked at suggested that early fourth-quarter 2024 would see us almost back where we began, plus inflation. Can you rough it out in your unrenovated home until then?
Words by: Jen Jones
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