Buyers turn to properties with renovation potential for value and potential returns
A notable increase in demand for homes requiring renovation has been observed, with many buyers influenced by property transformation programs such as The Block.
Angus Raine (pictured right), chairman of Raine & Horne Group, noted the timing of the show’s broadcast aligns with the peak property season and the onset of warmer weather, both of which typically see a rise in renovation activity.
According to Raine, buyers are often motivated by the renovation projects showcased on television, inspiring them to undertake similar improvements. “There is no doubt that homes ripe for renovation often sell for less than more contemporary properties, so buyers may be able to score a quality property at a reasonable price and add value through improvements,” he said.
In south-western Sydney, homes in need of renovation are attracting a range of purchasers, including first-home buyers, developers, and some investors, according to Vince Labbozzetta, director at Raine & Horne Liverpool. But unlike the rapid turnover seen on television, property ‘flippers’ are less common in this area. Developers are primarily interested in larger sites suitable for duplex construction, but opportunities remain for those willing to renovate.
Labbozzetta observed that renovated properties can command higher prices, and even partial refurbishments tend to increase a home’s value. “A ‘fixer upper’ is normally a home where the kitchen or bathroom needs work done, and not every buyer will go for this,” Labbozzetta said. “A lot of people want to move straight into a completed property. However, renovators with time up their sleeves can make money on a property – often at least a profit of 10%.”
In Brisbane, Des Besanko of Raine & Horne Brisbane Central explained that buyers seeking homes in fringe suburbs near the CBD often consider older properties, as vacant land is scarce and typically more expensive. “Buyers who opt to purchase a vacant lot and build are looking at around $800,000 by the time they build a home – this can be found in the more affordable suburbs in say Springfield through to Ipswich where there is more of an abundance of vacant land,” he said.
Besanko added that purchasing a home in need of renovation can be a more accessible entry point for some buyers. “The other option for a relatively affordable entry level home is to buy a ‘renovator’s delight’ and do it up,” he said. “On a quality renovation, every $1 spent can drive a $2 uptick in the property’s value.”
In Adelaide, competition for homes requiring work is evident, particularly among first-home buyers who are able to undertake renovations themselves. James Trimble, senior sales agent and auctioneer at Raine & Horne Adelaide, noted that this trend is contributing to upward pressure on prices. He also pointed to the importance of location, citing infrastructure developments and the gentrification of nearby suburbs as positive indicators for potential value growth.
“We have seen interest in Glanville go through the roof because of the AUKUS submarine project,” Trimble said. “Buyers are clamouring to buy a fixer upper in the area as a way of getting into the market before the bottom rungs of the Adelaide property ladder go missing altogether.”
The trend towards renovation-ready homes has implications for mortgage brokers. As more buyers seek to finance property improvements, brokers may see increased demand for construction or renovation loans. Advising clients on suitable finance options and understanding local market trends will be key to supporting those looking to add value through renovations.
While renovation projects require significant investment of time and resources, buyers are advised to consider whether improvements will ultimately add value. “Raine & Horne property experts can also explain the features most sought-after in any given neighbourhood,” Raine said. “This is valuable local knowledge that I encourage renovators to take advantage of.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
