New home reno trend exposes big property shift

Buyers are flocking back to buy a certain type of home as a renovation revival kicks in.

Buyers are flocking back to run-down and dilapidated homes, spending millions on dumps in a citywide renovation revival.

Unrenovated properties fell out of favour post-Covid as construction costs soared in the wake of supply chain woes coupled with a shortage of tradies. Today, however, potential purchasers are braving the renovator’s delight once again as the building sector stabilises.

Roby Sharon-Zipser, CEO of Hipages, said more tradespeople are heading to the portal seeking jobs, signalling a shift in the supply versus demand equation.

“A year and a half ago it was very difficult to get tradies, but this year we’ve already seen changes in the tradie economy. We’ve got a record number of trades joining Hipages and about 5000 trade businesses expressing interest with us each month, up by about 30 to 40 per cent on previous years,” he said.

2 Little Dowling St, Paddington sold for $1.56m.

A recent Hipages consumer study showed more than a third of homeowners intended to renovate in the next 12 months with an estimated spend of under $3000 while a quarter intended to spend more than $10,000.

“Inflation has started to normalise and we’re getting some stability now supply chains have caught up around the world. I won’t go so far as to say material costs will come down, but prices have stabilised.”

Mr Sharon-Zipser said buyers looking to purchase a run down property are no longer faced with uncertain timeframes and budget blowouts.

SOLD FOR $1.81M: 14 Burton Street, Glebe,

SOLD FOR $1.81M: 14 Burton Street, Glebe.

The demand for dumps is strong. Picture: Tim Hunter.

“We know if you post a request for a trade service, especially in Sydney, you’ll get responses from multiple qualified and vetted tradies within a few minutes. Go back a couple of years and you’d be lucky to get one or two replies and we generally recommend people get at least three,” he said.

‘BEST STRATEGY IS TO BUY, RENOVATE AND RENT’

Celebrity house flipper and founder of the Renovating for Profit courses, Cherie Barber, said before the pandemic she allocated 10 per cent of the purchase price for renovations, in today’s building climate she’s suggesting a 20 per cent budget.

“Throughout the second half of 2022 and all of 2023, renovating for profit was definitely more difficult. Property prices were slightly inflated, then you had material cost increases and some tradies charging a much higher rate which can make renovating for profit a recipe for disaster.”

She added that before Covid she devoted 40 per cent of renovation costs to materials and 60 per cent to labour, but explained the equation had now reversed.

The Space Invaders presenter said it’s “wishful” thinking if homebuyers are expecting the cost of renovating to go down, but added it’s still a good time to strap on the tool belt.

“I feel like now is the best time to buy a home for renovation because sellers are very realistic. And my prediction is that when interest rates go down, it’ll be on that second rate cut that prices could take off again,” she said, adding that while there is still profiting flipping the real money is in holding.

“The best strategy is to buy, renovate and rent. I’ve been saying this for 15 years and I continue to say it. Because when you decide to sell, you lose a lot of the profit you can’t get back.”

4 Water Street, Annandale.

SOLD FOR $1.23m: 32 Angel Street, Newtown.

Sold for around $10m, 32 Wallaroy Rd, Woollahra

‘NO ONE’S AFRAID OF RENOVATING’

Multiple unliveable dumps have already exchanged for top dollar across Sydney this year, many with several interested buyers including builders, flippers and homeowners.

Last week Catherine Dixon of PPD Real Estate sold an uninhabitable three-bedroom house on Little Dowling St in Paddington for $1.565 million.

“We had about 13 registered bidders at auction and probably half a dozen participated. The buyer was a woman who bought it for her son in his 20s, they’re not builders but homebuyers,” she said.

With scaffolding holding up the rear of the property and no stairs to the second level, the listing described a “crumbling Victorian terrace” that had been “neglected for decades”.

Sold for $1,918,000: 43-43A Edgeware Road.

“The only issue we had was the restricted access, which was via an easement over a neighbour’s property. Otherwise, renovations aren’t putting people off, no one’s afraid of renovating in the inner city.”

Last month a structurally unsound three-bedroom terrace on Arundel St in Forest Lodge fetched $1.57 million, in February a mould-ridden house on Water St in Annandale sold for $1.32 million and a derelict five-bedroom house on coveted Wallaroy Rd in Woollahra achieved a whopping $8.8 million despite having missing ceilings and a crumbling exterior.