If your housing needs have changed, you may be weighing up whether a renovation is worth your time and energy, or whether it makes more sense to move.
There are pros and cons for both, and the right answer for you depends on a few things, including:
- The features you need.
- Your lifestyle – do you work full time, for example, or can you dedicate time to renovating?
- Your budget and renovation goals.
Benefits of renovating
If you’re looking to renovate, consider the impacts it may have on your life and your finances. Benefits can include:
- If you’re happy with where you live, renovating means you’ll stay in the same location.
- You'll avoid the costs that come with buying a home such as stamp duty as well as legal, registration and real estate agent fees.
- You may increase your property’s value with the renovations; even small changes can make a big difference.
- You can avoid the stress and hassle of moving.
The cost of renovating
A cost-benefit analysis can help you work out whether renovating will add sufficient value to your home, or whether looking for another property with your desired features is a better approach.
Building and construction costs change rapidly and can increase or decrease based on supply and demand. Different costs apply relating to the quality of the upgrade as well; a kitchen bench, for example, can cost anything from $5,000 up to $25,000, depending on the size, type and quality.
It’s difficult to provide an accurate cost estimation as each renovation is unique. But as a guide, you can expect to budget roughly as follows:
Property value |
Small-scale, cosmetic renovations – around 10% of the property’s value |
Larger-scale, major renovations – around 20% of the property’s value |
$300,000 |
$30,000 |
$60,000 |
$500,000 |
$50,000 |
$100,000 |
$750,000 |
$75,000 |
$150,000 |
$1,000,000 |
$100,000 |
$200,000 |
$1,500,000 |
$150,000 |
$300,000 |
Note: These figures are a guide only as building and renovation costs are subject to change and depend on the nature of the build and quality of materials used.
Funding a renovation
Your options include:
- Save the entire amount
- Refinance your home loan
- Top up your home loan
- Access the equity you’ve built up in your home loan
- Take out a personal loan
Benefits of moving somewhere new
- You can choose a totally new property and even neighbourhood, depending on your needs.
- It can be easy to underestimate the cost and time involved in renovating, whereas moving house is usually more straightforward.
- You may not be able to carry out all the changes you want to make to your existing property due to its current condition.
- You won’t have to worry about the renovation going wrong, and surprise challenges like rot, structural damage or termites adding stress and cost to your project.
The cost of moving to a new home
The costs will vary depending on a number of factors, including location as stamp duty rates vary between states and territories.
As a guide, you can expect to pay:
- Legal fees when selling and buying: $2,000-$5,000
- Real estate agent commission: usually 2%-3% of the sale price, plus GST
- Advertising and marketing costs to sell: $2,000-$4,000
- Stamp duty on your new home: usually 2%-5% of the purchase price
- Moving costs: $500-$5,000, depending on your needs.
