Moving house versus renovating: what to consider
It’s one of the great dilemma of our times: should I stay or should I go? The Clash song was about a troubled relationship, but nowadays the quandary applies equally to real estate.
Newspaper property pages have always been full of yarns about the rich and famous swapping one trophy home for another.
That could be changing. The Sydney Morning Herald newspaper’s Domain section recently ran a double-page news story headlined: “Sydney’s ultra-wealthy take to renovating their salubrious residences en masse”.
Real estate agents might be a little concerned if the trend takes hold, but architects and builders will be cheering it on.
As well as the financial arguments for and against, emotional arguments can also tug your decision around. And at the end of the day, for many people, emotional arguments probably have the most influence on their decision.
Namely, the excitement and sense of adventure of a new beginning, versus staying in an area to which they have strong ties, a sense of belonging and happy memories.
For Michael Minogue of Laing+Simmons real estate in Sydney’s expensive suburb of Woollahra, one of the great attractions about moving is the thrill.
“Regarding the advantages of moving rather than renovation, you could say that it’s an adventure, it’s new – that a change is as good as holiday, you get to go on a hunt. I’m dealing with a woman at the moment where she doesn’t really need to move but she is thinking of her future.
“What’s happened is, it’s gone from just a chat to ‘No I don’t think I’ll move, I’ve liked it here 30 years’, to ‘This is a bit of an adventure.’ So we went for a drive yesterday and we went down to [the beachside suburb of] Maroubra and had a look around, and the more she’s getting into it the more she says ‘Maybe I will do this’.”
On the other hand, believes Jen Humphry, owner and director of renovation specialists Modify, staying put can satisfy people’s most basic needs.
“The routine for getting to work, exercising, eating out, getting children to schools, etc can be maintained. And so, particularly for people who love the area where they live, modifying is far preferable to moving.”
There’s also the cost of moving. Stamp duty payable on the purchase of the new property, solicitors’ fees, real estate agent fees and marketing costs – it all adds up.
Humphry says that most clients come to her one-stop-shop company (it handles everything, from the initial design brief through to construction) “because they have considered the transactional costs of moving. And they recognise that transactional costs would be better spent on renovating their existing home rather than being paid to the government, solicitors and agents”.
Of course, you may need to move out of your home while it’s being renovated. Humphry says the best way to minimise this disruption is to “rent somewhere nearby to ensure you can be around should the builder need on-site attendance. This also means day-to-day life is familiar and your routine does not need to change.”
As well saving money, renovating can make you money. Your renovated home will probably have more capacious storage, well thought-through functional spaces for modern-day living, and new finishes that will appeal to prospective purchasers.
The money angle
Humphrey says renovating properly with professional help will “create capital growth for your existing asset so that if or when you go to sell, your property will be worth more – providing you work with professionals to plan your renovation carefully, consider cost options and ensure you don’t overcapitalise in the renovation process”.
Similarly, there are also financial benefits to moving, especially if you’re an empty nester. Laing + Simmons’ Minogue says that “if you’re selling and downsizing, then you get to put money away for super, you’ve got more money to play with, and you can probably buy something more suited to what you want”.
“If your life has changed, you can then buy to suit your current life not your old life,” he continues. “People have been here 20, 30, 40 years and they’re in a house that was their old life and it’s not their new life, their kids have gone. And they have changed themselves. People grow old – or older – they start to think, ‘If I renovated I’d do this’ and then they think, ‘It’s a big house there’s only two of us here now and I’ve got four bedrooms’.”
Summing up, Minogue says, “There are advantages to moving, but you need to move for the right reasons. A lot of people tend not to, they move for reasons that are probably wrong, given there hasn’t been enough planning or thought. And a lot of people have sold up to move and then can’t get back into the market.”
Whether you’re an A-lister featured in the paper who’s forking out $3.7 million for a renovation to a property that cost $16.8 million, or Michael Minogue’s thrill-seeking client, it appears there’s just one rule when it comes to deciding whether to move or renovate: make sure you’re in touch with your emotions before you start thinking about money.