Why people are improving rather than moving home
More and more New Zealanders are doing up their existing homes rather than moving or building new. A case in point is Will and Diana Miller, an Auckland couple featured in a recent newspaper article who said they were well aware the market was falling when they bought their home for more than $1 million a year ago.
“It doesn’t concern me overly, because the reality of the property market is that it’s cyclical,” Diana said. “For new Zealanders, our home is our castle. New Zealanders love owning homes and therefore we will continue to do so.”
The Millers are also planning to renovate, a strategy which property guru Olly Newland said in another newspaper article was “a good way to shore up your home’s value in a market where it is no longer possible to achieve capital gains without having to do so much as lift a paintbrush.”
Newland’s rule of thumb is to get a $3 return for every dollar he puts in.
He calculates this by getting a property valued as it is, together with an estimate of how much the value will increase by when the planned renovations are complete.
“As well as creating capital gain when the market has stopped doing it for you, strategically enhancing your home now means it will be in prime position to go on the market if you decide to sell and want to get the best price possible,” said the article.
The renovation market should receive a welcome boost from the growth in the new Zealand economy that Reserve Bank Governor Alan Bollard expects to begin toward the end of this year.
“For the first time in some months, we can also identify some clear upside opportunities for activity,” he said recently.
“One such area is a potential rebound in household spending and residential investment as a result of the rise in net immigration and the pick-up in the housing market.”
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