Buying New Vs. Renovating a House
Rich May, Poor May
A lot has been talked about the ever-widening gap between rich and poor in society. We often hear about the bulk of the wealth being controlled by the top one percent. We are noticing a similar trend in the residential property market with the price gap opening up between well-presented properties and those that require work. It used to be a common saying that ‘people pay too much for potential’, now it would appear that people are willing to pay too much for well-presented properties.
So why is it that we are seeing this gap widen?
1.Time Poor – Renovating vs. Buying New
Although the 24hr clock hasn’t changed since Egyptian times, modern society appears to have fewer hours in the day, with extended work days and technology demanding we are available around the clock. This places demand on our recreational time and leaves less time, each week, to spend on redecorations and renovations.
A decade ago, couples looking to get ahead would spend their weekends improving their property in the hope of making some capital gains. These days those couples are more likely to be found drinking coffee, or mountain biking in their free time and returning home to enjoy the lifestyle the property already provides.
2. $60-$100 Dollars an Hour – Escalating Cost of Construction
The cost of getting work done on a property has increased significantly over the previous few years, and those of you who have had work done recently will know about it. The official line from the Reserve Bank is that we have been running at low inflation levels, but this is not the case with building. Just last week an architect was telling me about the cost quoted to dispose of some asbestos lining under some old lino. The quoted price came in at a bargain total of $22,000. With this prohibitive cost, they’ll now be laying vinyl over top.
3. The Value of Life -Health & Safety in Construction
It’s important that people return home at the end of a day’s work, and this had been reflected in the rigorous new health and safety practices. The adverse effect of this is it incurs a cost, which is passed on to the consumer and adds to the overall expense of doing work. We had a personal experience with this recently when we had to get a new connection to the water main. The cost of the job was $5000, $2500 of that associated with traffic management for a four-hour job!
4. Social Media and the Aspirational lifestyle – House Styling
For anyone familiar with social media you will also note the carefully curated lives people choose to publish to the masses. This further reinforces the value placed by buyers on overall decoration as opposed to the fundamentals of the property. I have seen many a good property overlooked by buyers as they concentrate on the décor, not what the property offers. Window dressing is just that, window dressing, but for a potential vendor, it’s an excellent place to invest a few dollars and make a return.
The market has moved into winter mode with fewer properties coming to the market and the last of the summer stock being sold or withdrawn. We have noticed that some properties are being passed in unsold on the closing date and moving to new methods of sale in the days following. This is a large departure from the market of twelve months ago when you could almost guarantee that any given property would sell with multiple offers at the deadline. For anyone looking to sell, don’t be alarmed, we are just reverting to a more balanced market. Good quality, well maintained properties are still selling well. And for those not selling at tender, we are still experiencing almost 100% clearance rates in the days and weeks following.
WELLINGTON MARKET QUICK FACTS
Average sale price by Ward:
Did you know:
- New Zealand celebrates the US version of Mother’s Day – always on the second Sunday of May
- The modern holiday of Mother’s Day was first celebrated in 1908, when Anna Jarvis held a service to recognise all mothers, on the 3rd anniversary of her mother’s death. Over the years the service became popular
- By 1911 all states had started to observe the Mother’s Day holiday
- The European celebration of “Mothering Sunday” is celebrated on the 4th Sunday in Lent which is three weeks before Easter.
HAPPY MOTHER’S DAY TO ALL THE MUMS OUT THERE!
If you or anyone you know could benefit from a considered market assessment by Wellington’s only licensed agent and registered property valuer, please do not hesitate to call. We are always very happy to help.