Date: 4th December 2011 The cost of upgrading to a better suburb or bigger house continues to get more and more expensive. Increasingly too, the time to sell a property is stretching. In some Sydney suburbs, for example the time to sell a property has doubled over the past two years rising from around 50 days to over 100 days in some suburbs. All in all, home owners are staying put and choosing the renovation route Australian Bureau of Statistics date may have provided disappointing update for new home building activity but show that major renovations continued to post growth in the September 2011 quarter. The total seasonally adjusted residential building work done fell by 1.1 per cent to $11.4 billion in the September 2011 quarter. New residential building work done fell by 1.5 per cent in the September 2011 quarter to be down by 5.2 per cent on the September 2010 quarter while the value of major renovations work done grow by 0.9 per cent to be up by 6.3 per cent on the commensurate quarter one year earlier. The September quarter result for major renovations (alterations and additions) represents the fourth consecutive quarter of growth and took the worth of work done on major renovations to almost $1.9 billion, a new record high. Nationally, new home building has been on a consistent downtrend, while renovations have not only held up well but continue to grow – the renovations side of the home building industry is definitely the shining light at the moment This trend of growing renovations is likely to continue not only because Australians love to renovate but also as households increasingly prefer to direct excessive property transaction costs towards improving their existing homes rather than trading up. Renovation investment is also increasing on a per-home level. It no longer uncommon to see $500,000 renovations across Sydney and Melbourne suburbs – especially when a second floor is added. Improvements in kitchen and bathrooms with walls reconfigured in apartments can cost between $40,000 and $200,000. With stamp duty costs and moving cost unlikely to come down any time soon, the trend to pour money into renovations will continue offering first home buyers and investors the benefit of less competition in the sale market.
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