Should You Knockdown And Rebuild Or Renovate?
Need more space, or want to increase the value of your property?
Thinking about building your own grand design here in the eastern suburbs? We look at the different approaches to home improvement, including renovating, knocking down and rebuilding, and property amalgamation, and ask the million-dollar question – is it worth all the pain?
When it comes to finding your dream home, sometimes it seems the best thing to do is create it yourself. But are you better off knocking down and rebuilding from scratch or renovating an existing property? And is the end result worth all the pain?
The major renovation
Home renovations are peaking in popularity here in Australia. Data from the Australian Bureau of Statistics (ABS) shows that Australian renovators spent a huge $12.3 billion on transforming their homes in 2021, up 33 per cent on 2020 and almost double the amount spent a decade ago.
And it’s easy to understand why. Undertaking a major renovation can be a fantastic way to add value, space and achieve your own grand design. A thoughtfully and tastefully executed refurbishment can take a home from tired and outdated to stylish and comfortable. The renovation route works especially well for properties that possess character and charm, often with coveted period details, but no longer suit a contemporary lifestyle. For that reason, it’s particularly popular in suburbs like Paddington and Woollahra, where homeowners want to retain their property’s heritage elements while maximising the site’s space and light to create an ultra-liveable contemporary home. A sophisticated redesign conceived by a well-regarded architect can prove popular when it comes time to sell, too. We saw this in action when we sold 14 Lang Road, Centennial Park, redesigned by architect Luigi Roselli with interiors by Alexandra Kidd, earlier this year.
The knockdown rebuild
Sometimes, a renovation, no matter how major, isn’t the answer, and that’s when homeowners might look at knocking down and rebuilding. A knockdown rebuild offers the advantage of starting from scratch, giving homeowners a clean slate on which to design their dream home from the ground up. It can be a good option if the existing house has structural issues, if you’re looking to upsize your home significantly, or if you want to take full advantage of your block, perhaps by relocating the main residence and adding a pool or studio.
Knocking down and rebuilding is becoming increasingly popular along the eastern beaches, where properties are often younger than in the inner east and therefore less likely to possess period features or heritage facades that need retaining. Having said that, when a brand new home comes onto the market in an area like Paddington, it attracts plenty of interest from discerning buyers, as we found when we sold 11 Stephen Street in late 2021.
It’s not uncommon to see older, original homes perched on exceptional parcels of land sell very well to buyers planning a knockdown rebuild. And it’s helping fuel the demand for “lifestyle” properties along the Eastern Beaches. 3 Calga Avenue, Bronte, which we sold earlier this year, is a prime example. This original 1950s house on a private north-facing block sold to a buyer who realestate.com.au reported plans to replace it with a grand new residence to capitalise on the site’s sweeping ocean views.
Apartment and terrace amalgamation
In the established areas of Sydney’s inner east, canny homeowners are gaining space and creating larger homes by amalgamating two or three adjoining properties. It’s a particularly popular technique in the many apartment buildings of Potts Point and Darling Point, where homeowners are acquiring adjacent apartments – either side by side or one above the other – and, after receiving consent from the council and the building’s owners’ corporation, transforming them into one generous residence. In areas like Potts Point and Darling Point, where buildings are long-established, and already at their maximum heights, it’s a savvy way to create a larger home with house-like proportions.
We’ve also seen the same technique applied to adjoining terraces in Woollahra like 17-21 Rush Street, which we sold in November 2021. Over 15 years, the vendor acquired three adjacent terraces in original condition and then spent another seven years designing and building a luxurious oversized residence. In a suburb like Woollahra, where the blocks of land traditionally limit a dwelling’s proportions, amalgamation is a clever way to expand a home’s footprint.
The cost of construction – does it add up?
Of course, improving your home comes at a cost. In the past, many have adhered to the logic that when property prices are high, the changeover costs associated with buying and selling, like stamp duty, legal fees and moving expenses, make it more cost-effective to stay put and renovate.
But thanks to a spike in renovations and new builds, together with supply chain issues and materials shortages, construction costs in Australia are peaking. The latest data from CoreLogic shows a national increase of 3.8% in residential construction costs over the three months to September 2021, significantly outpacing the Consumer Price Index (CPI) of 0.8% for the same period. In fact, it is the largest quarterly price hike since the September quarter of 2000.
This increase in construction costs is undoubtedly driven by the fact that building material costs are rising at their fastest rate in more than 40 years. Data from the Master Builders Association (MBA) of NSW reveals that national residential building material prices rose by 4.2% in the March 2022 quarter and are now 15.4% higher than a year ago. The MBA figures show that reinforcing steel prices are up 43%, structural timber has risen 39%, copper pipes 25%, and terracotta tiles 21%.
Before pushing ahead with major home improvements, it makes sense to weigh up the costs of renovating or knocking down and rebuilding in today’s market – including your own time and labour and a buffer for the unforeseen expenses that almost always arise – against the changeover costs of selling your home and moving on.
If you’re looking for advice on whether you should renovate, knockdown and rebuild or sell, we can help. Get in touch with our team today.