He’s a bit of a fixer-upper: 4 in 5 first home buyers intend to renovate
First home buyers are getting practical with different tactics to enter the property market, including home renovations according to new research by Finder.
According to Finder's First Home Buyers Report 2021, which surveyed 1,028 first home buyers, 79% are already planning to renovate their new home.
The research found 1 in 5 (22%) plan to renovate immediately after buying, while 30% will do so within the first 12 months.
A further 23% will undertake a home makeover within the first 5 years, followed by 5% who intend to renovate 6 or more years down the line.
Sarah Megginson, Finder home loans expert, said that the property boom had instilled a fear of missing out among prospective first home buyers.
"With property prices showing no signs of slowing down and interest rates at an all-time low, first home buyers are getting creative with different tactics to get into the market.
"In a hot market, it's not always possible to buy your ideal home, let alone your dream home. What some first home buyers are finding is that their best chance to get on the property ladder is by purchasing a 'fixer-upper' in a suitable suburb."
For city dwellers, 82% of first home buyers intend to renovate sometime down the line, compared with 75% of those living regionally.
"Australians have spent more time at home in the past year, and for many, our kitchens, bedrooms and dining rooms became our new offices.
"Along with government incentives to renovate like the HomeBuilder scheme, which expired last month, this has led to a boom in home makeovers."
The data shows men are more intent on renovating than women, with 85% planning some form of renovations in future, compared with 74% of women.
Previous Finder research estimated 5.9 million households would undergo renovations this year.
Overall, Megginson said first home buyers are starting to see they have to be creative and flexible about what their first home might look like.
"My first home was not my dream home by any stretch.
"It was a two-bedroom apartment and the walls were made of besser block, the fixtures and fittings were cheap and flimsy, and the back courtyard was so tiny you could almost touch both sides if you stood in the middle.
"But, it was affordable and it got me on the property ladder.
"I moved from that property to another even older, uglier unit, which we renovated and made a small profit on, then we upgraded into a townhouse. I used that strategy to eventually end up in a beautiful four-bedroom home," Megginson said.
On average Australians spent $63,118 per renovation project last year, with kitchens, bathrooms and outdoor areas being the top projects of choice.
A previous Finder survey found 28% of homeowners would add renovation costs to their existing mortgage, or refinance if possible, and 17% would get a personal loan.
"Digging into your mortgage or refinancing is the cheapest way to fund a renovation with the current low-interest rate environment.
"If you don't have enough home equity to fund your project, try asking your lender to value the home based on its post-renovation value.
"Alternatively, a personal loan could finance up to around $100,000 worth of works, but consider how much you'll pay in interest before borrowing a big chunk of money," Megginson said.
How to budget for a renovation:
- Source multiple quotes. Obtain quotes from at least three different professionals for each major task. This will help you to get the best deal and be able to estimate your overall renovation cost.
- Break it down. At the costing stage, split out your individual costs for each part of the renovation. For instance, if you're planning to tile a wet area, you should separate the costs for each separate task (e.g. waterproofing, tiles, labour) as this will help you keep tabs on your expenditure.
- Allow for hidden costs. Having a contingency buffer of 10–20% of your budget will come in handy for any expected costs or council fees you hadn't accounted for.