Renovations have become a de facto second rung for many on the property ladder, with homeowners finding doing up or expanding their home more attractive than selling and buying in the current market.
In the year to April, building consents were granted for $206 million worth of renovation work on Wellington homes – $70m more than four years ago.
But that does not guarantee the house will be worth more than the cost of the renovation, warns Harcourts Wellington sales manager Antonia Brown.
Buying an existing property could be an ‘‘easier option’’ but, with Wellington still running a sellers’ market, there was almost always competition between buyers, she said.
That could be disheartening for those who missed out on a few houses in a row and contribute to people choosing to renovate instead.
ANZ senior economist Miles Workman said the data on building consents may not indicate the work that actually occurred, though it showed an increasing appetite for renovation.
‘‘We’d have no way of knowing with much certainty whether people were choosing to renovate instead of buy but, certainly, you hear people doing it anecdotally.’’
Workman said increasing amounts of renovation was a ‘‘natural phenomenon’’ after a long period of house price inflation when interest rates were low.
That meant people had a bit of equity in their house and the temptation to improve the kitchen or add a room became stronger. ‘‘All you need to do is get your house revalued and you’ll probably stay within your LVR (lending restrictions).’’
Wellington region building company owner Rudy van
Vlerken said most people were staying put because it was more expensive to relocate.
He had been building in the Wellington region for years and renovations were his company’s specialty. ‘‘Most people bought their home when their children were younger and now their children are growing up and they want more space or they want to have boys and girls in individual bedrooms.’’
Van Vlerken said his renovations tended to be bathroom and kitchen upgrades.
With the increasing amount of consents for home renovations, his turnover had increased every year.
However, it was still an industry struggling with the increasing cost of materials and small margins. Over the course of a sixmonth renovation, he often found the cost of timber and steel had increased ‘‘6 to 8 per cent’’.
He was preparing for the Wellington market to mimic Auckland’s
recent slow-down over the coming years.
Statistics New Zealand figures show in the year to April, consents were granted for $206m of renovation work on Wellington homes. In the year to April 2015, consents amounted to $137m.
It’s a trend that is also occurring on a national level with an overall increase of $180m on home renovation spent across the country, compared to four years ago.