A recent article in the Herald Sun highlights the issue of trying to trade up lifestyle and amenity in a rising property market.
According to the REIV the median house price in Melbourne for the September 2016 quarter was $740,000. For inner suburbs the median price indicated was $1,336,500.
Table from REIV Website
If we take Northcote for example, the median price is $1,127,500. For a two bedroom home the median price is $950,000, while for a four bedroom home the median price is $1,615,000.
Obviously these median prices are for a mixture of renovated and un-renovated homes.
Based upon this median price, to sell your existing two bedroom home would cost in the order of $25,000 including advertising.
To purchase a four bedroom home (assuming you can buy one for the median price), the stamp duty alone amounts to $88,825. Add to this the State Revenue Office transfer fee and legal costs you will be paying in excess of $90,000 on the purchase.
Stamp Duty Calculation from SRO website
Taking into account these two costs alone, the average cost of moving within the suburb of Northcote for additional space is in the order of $118,000 even before you take into account the difficulty in securing properties in the inner city suburbs of Melbourne like Northcote due to the intense competition.
Any landowner who has held land in Northcote within the past five years will have seen strong growth in values and equity in their homes.
So the decision to undertake a renovation, Ground Floor Extension or double storey extension can be made easier when you consider that you can be miles ahead by not moving.
Another aspect to consider is the value that you add to your existing home by increasing the accommodation. One of the questions a bank valuer will always ask is the number of bedrooms and bathrooms that a house has. This, along with the land size is a good guide to the ultimate value of your home.
Over the past decade, Supa Group have constructed over thirty ground floor and double storey extensions in Northcote and surrounding suburbs such as Fairfield, Thornbury and Preston. As a price guide we recently finalised a double storey extension with two additional bedrooms, a break out area and upstairs bathroom for just short of $250,000. The all up costs including a new kitchen and Renovations of the existing downstairs area would have cost the owner somewhere in the order of $325,000.
If you like the area that you live in – your neighbours, the schools, local café and shops, then you should seriously consider a home renovation and extension and take your house from this