Invest
How a housing shortage is driving a renovation boom
The latest building approvals figures reveal an upswing in home renovations over the past five months.
How a housing shortage is driving a renovation boom
The latest building approvals figures reveal an upswing in home renovations over the past five months.
During January 2017, spending on home renovation jumped to $661 million and has been on the increase since August 2016 when spending on home renovations totalled $625 million.
Overall, Australians are now spending on average $165 million every week on home renovations.
Spending on home renovations is particularly strong in the boom cities of Sydney and Melbourne where the supply of houses for sale is becoming a major concern for upgraders and investors.
This issue is highlighted by the fact the actual number of properties listed for sale in Sydney fell by 11.3 per cent during the year ending February 2017 according to the latest CoreLogic figures.
The famine of housing supply in Sydney is further underlined by the fact that there are now fewer homes for sale in Sydney (21,207) compared to Perth (22,252) which has a much smaller population.
In particular, the lack of housing supply in the mid to upper end of the property markets in both these cities is encouraging more people to renovate.
Unable to find a suitable home to upgrade to, these property owners in the Sydney and Melbourne property markets are now deciding to simply upgrade their existing homes.
Property investors also face the same predicament as they are increasingly being forced to buy older homes for renovation purposes.
Typically, these investors plan to renovate the properties with a view to either sell them in the short term at an enhanced profit or keep them long term and boost rental returns through these renovations.
While home renovations can be a great way for investors to make money through property investment, they still need to do their homework before undertaking such as enterprise.
One trap is for property investors to overspend on renovations because they become emotionally attached to the property.
As a result, they risk over-capitalising the property which is one of the most common mistakes in real estate.
The danger with home renovations is that the investors can spend thousands of dollars improving their home only to find that when they sell their property, they cannot recover the money they spent.
In addition, many property investors fail to claim their full tax benefits relating to home renovations.
Unfortunately, many investors throw out many items without understanding that they may claim tax benefits on these materials at 100 per cent of its written down value in the year of disposal.
A typical amount spent on a home renovation can range from $30,000 to $60,000 for a basic refurbishment. However, an investor can qualify for both plant and capital works allowance as a tax deduction and the residual write off of the disposed item through tax depreciation benefits.
To qualify for these generous tax benefits, investors have to undertake a depreciation schedule for the property as near as to the date of purchase as possible.
Paul Bennion, managing director, DEPRO
RELATED ARTICLES
-
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
-
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
-
From intuition to instrumentation: How a "two-stakeholder" sales playbook lifted close rates and cut cycle times
Property
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
NSW’s latest enforcement action on real estate trust accounts isn’t a one-off embarrassment; it’s a stress test of sector governance. With licences suspended and penalties applied, the message is ...Read more
Property
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
After a blistering run, Australia’s rental market is loosening at the edges. Vacancy is edging up off historic lows, rent inflation is set to moderate into 2026, yet underlying demand remains ...Read more
Property
From intuition to instrumentation: How a "two-stakeholder" sales playbook lifted close rates and cut cycle times
High-stakes consumer purchases are increasingly joint decisions. When one partner is under-served, deals stall. This case study follows an Australian real estate group that rebuilt its sales motion ...Read more
Property
Selling in 2025: How to spot bad agents fast—and build an ROI-first vendor playbook
In Australia’s property market, choosing the wrong listing agent isn’t just inconvenient—it’s a textbook principal–agent failure that can wipe tens of thousands off your sale outcomeRead more
Property
Selling in 2026: How to de‑risk your agent choice and protect tens of thousands at settlement
Choosing the wrong selling agent isn’t just an inconvenience — it’s a balance‑sheet risk. In a market where digital discovery is concentrated and AI is recasting how listings are priced and promoted, ...Read more
Property
Rate resilience in Australian housing: why scarce supply is overpowering monetary tightening
Australia’s housing market is defying higher borrowing costs because the binding constraint isn’t demand—it’s supply. Brokers report persistent buyer competition and investor repositioning, while ...Read more
Property
Victoria’s $100m renter support push: what it means for landlords, proptech and the housing economy
Victoria has unveiled a new suite of rental support services, including a dedicated helpline for renters aged 55+, underpinned by a funding package widely reported at around $100 millionRead more
Property
The multigenerational home moves mainstream: where the next margin lives in Australian real estate
Multigenerational living is shifting from edge case to core demand driver in Australia’s housing market. For agents, developers and lenders, the commercial upside lies in rethinking product design, ...Read more
Property
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
NSW’s latest enforcement action on real estate trust accounts isn’t a one-off embarrassment; it’s a stress test of sector governance. With licences suspended and penalties applied, the message is ...Read more
Property
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
After a blistering run, Australia’s rental market is loosening at the edges. Vacancy is edging up off historic lows, rent inflation is set to moderate into 2026, yet underlying demand remains ...Read more
Property
From intuition to instrumentation: How a "two-stakeholder" sales playbook lifted close rates and cut cycle times
High-stakes consumer purchases are increasingly joint decisions. When one partner is under-served, deals stall. This case study follows an Australian real estate group that rebuilt its sales motion ...Read more
Property
Selling in 2025: How to spot bad agents fast—and build an ROI-first vendor playbook
In Australia’s property market, choosing the wrong listing agent isn’t just inconvenient—it’s a textbook principal–agent failure that can wipe tens of thousands off your sale outcomeRead more
Property
Selling in 2026: How to de‑risk your agent choice and protect tens of thousands at settlement
Choosing the wrong selling agent isn’t just an inconvenience — it’s a balance‑sheet risk. In a market where digital discovery is concentrated and AI is recasting how listings are priced and promoted, ...Read more
Property
Rate resilience in Australian housing: why scarce supply is overpowering monetary tightening
Australia’s housing market is defying higher borrowing costs because the binding constraint isn’t demand—it’s supply. Brokers report persistent buyer competition and investor repositioning, while ...Read more
Property
Victoria’s $100m renter support push: what it means for landlords, proptech and the housing economy
Victoria has unveiled a new suite of rental support services, including a dedicated helpline for renters aged 55+, underpinned by a funding package widely reported at around $100 millionRead more
Property
The multigenerational home moves mainstream: where the next margin lives in Australian real estate
Multigenerational living is shifting from edge case to core demand driver in Australia’s housing market. For agents, developers and lenders, the commercial upside lies in rethinking product design, ...Read more
