Renovating Guide

Depending on your motivations for renovating, you could be looking at a few changes or a complete overhaul. It is important to make sure you are going to get a good return on your investment especially if you are looking to renovate to sell in the near future. Significant investment might turn your home into your castle but if you are looking to recoup that investment when you sell it is good to know how much to invest where.

 

What adds the most value to your home?

It is the kitchen and bathroom that will deliver the most increase in value from a renovation project but you always have to keep in mind the home and property, and the location.

Whether or not “high specification” adds value varies. If you put in a $30,000 bathroom or kitchen, whether it will add the same amount of value to your home as you spend depends on the home and the neighbourhood. The kitchen and bathroom are a good place to spend money but you can overdo it.

Spending money on kitchens and bathrooms will usually add value to a home. But if you want to know whether to spend $10,000 or $30,000 on your bathroom makeover you need to consider the overall value and location of your home. On a higher priced property you are likely to add at least the value of a ‘high spec’ bathroom but at the lower end then you might be better to spend $10,000 instead. A modern kitchen that doesn’t break the bank will still add value to a home. But if you spend $40,000 on a kitchen in a modest home, you may not get the same value back.

What about insulation and heat pumps?

Insulation and heat pumps are expected today. If your home does not have insulation or heating it may detract from the value so this is a good investment and will usually add some value. Solar panels could result in an increase in value but it is difficult to quantify because cost and value are not the same. You also need to consider what benefits the solar power brings and whether these benefits will be returned over a long or short period.

How much value does landscaping add to your home?

Tidy and well presented landscaping can add a significant amount of value a property. However it may not be a direct relationship between value spent and value added. The added value of well-presented landscaping is generally on the overall saleability of a home through increased street appeal/utility. It is a great way to get potential purchasers through your home on open homes.

In regards to how much should be spent on landscaping, it really depends on the overall value level and type of property. The market expectation of the level of landscaping in a high value suburb is significantly greater than that of a lower value suburb.

The nature of the property can also dictate the nature of the landscaping and site development utilised. For example if you own a high end character villa you ideally want to keep that timber picket fence out front rather than replace it with something more modern.

Property owners should consider the nature of their property and the wider neighbourhood before commencing any major landscaping works.

An example of this could be replacing timber joinery in a villa/character bungalow with modern aluminium joinery as this does not enhance the character and detracts from the value.

Does new carpet and a new roof add value?

These are generally considered as on-going maintenance costs. From a valuation point of view the focus is more along the lines of what would it cost to rectify any issues caused by not maintaining items of this nature rather than the value that they may add to your property.

Because carpets are a chattel, generally they won’t add value but will maintain value and help with saleability. Your roof falls under repairs and maintenance. The roof on a house is expected to be functional and do its job. You will lose money if leaks otherwise it is just a cost. You wouldn’t do it unless it’s needed. As long as the roof of the dwelling is well maintained, functional and in reasonable condition, you will not add huge value by putting on a new roof. But if the roof is leaking and does need replacing then this will detract from the value of a home quite substantially so it is worth renewing your roof if it needs replacing.

Does a garage add value?

The added value of garaging is also very dependent on the locality of the property. In areas which have larger land sites and generally more space, a new garage may not add much in value. However, in inner city suburbs where land is at a premium and the lots are much smaller and off street parking is scarce, a garage could add a significant amount of value to your property.


Latest News & Articles

Our Love Affair with the Chair

Friday, 7 December 2018

 
It’s so important to realise that when styling your home, you are bound most by your imagination. Of course, budget is an impactful factor as well, however even the most expensive ideas can be replicated with a bit of creativity. There are many ways you can reimagine your seating within your home and many styles of this that you can consider across multiple rooms in your interiors. The dining room and living room are obvious choices, and of course there are creative ways to amplify the seating in these rooms – bench seats where chairs would have normally been - but factor in spaces where a chair wouldn’t be the hero and take the opportunity to let it shine.
 
By your bedside. Traditionally chairs have been limited to their functionality, but in recent years our Pinterest feeds have been littered with bedrooms using beautiful rattan woven chairs as a hero bedside table or a vintage bentwood chair that doubles as a piece of art with a functional element. Depending on what you store by your bedside this could be complete with a stack of books and your skincare routine. Choosing a chair that seamlessly pairs with your interior style with a considered flare can transform the landscape of your bedroom. 
 
Although we considered the living space already, reimagining the chair in this space can transform even the most structured space into a den of comfort. Consider implementing ottomans as an extension of the seating, whether that be alongside your lounge or otherwise. Or alternatively, a low line modular lounge to expertly frame your room, whilst providing maximum comfort.
 
But outside is where the chair can truly shine as a hero piece in your exterior. Traditionally restrained to outdoor settings or fold out chairs, the outdoor setting has been reinvented to reflect an exterior that is modern and refined. Using on-trend rattan chairs to create a feeling that is both bohemian and considered can provide you with a space that ticks every box - being both flexible and on trend. Or using a chair as a focal piece and constructing your exterior around your plans. This might mean building external beams that you can use to suspend an intricate hanging chair or allowing the space to create an inbuilt bench seat to support your outdoor dining plans. Whatever the reason, it’s time to let the chair be the hero again.
 
 
As thoughts turn to the anticipated end-of-year break, we were curious as to how property has performed in some of NZ’s key holiday areas. Generally speaking, the areas we’ve looked at have been busy in terms of sales, with days to sell reasonably low. On top of that, value growth has also tended to be pretty strong. Holiday-makers who bought in to some of these locations a year ago will have even more reason to enjoy this year’s break.
 
CoreLogic research analyst Kelvin Davidson writes:
 
December is here, just like that: and no doubt the holiday break is top of mind for many. Some people may even be considering a sneaky property investment in one of NZ’s many popular spots. So how have these holiday locations fared over 2018? Across the 10 locations* we’ve analysed (and it’s not an exhaustive list), there are four stand-out observations.
 
First, and this may surprise you, but property in NZ’s popular holiday locations doesn’t necessarily come with a hefty price tag. As the first chart shows, many such locations have property values below the national average, with Whitianga sitting bang on the average. Of course, even if they are starting at “affordable” levels, many of these locations have also become a bit more expensive this year, with only Waiheke Island and Paihia recording flat values in 2018. Coromandel, by contrast, has seen median property values rise by almost 11% (equivalent to a rise of about $46,000).
 
Median property values and annual % change  (Source: CoreLogic)
 
Secondly, as the second chart shows, there’s no out of season lull really: these locations have generally had active property markets throughout 2018, with only Waiheke Island and Wanaka having had a turnover rate (sales as % of dwelling stock) noticeably below the national average. Coromandel again stands out, with a turnover rate of almost 8% in the past 12 months.
 
Third, when a property has come onto the market in these areas over the past year, it has tended to sell pretty quickly. Properties in Tahunanui, for example, have only taken a median of 16 days to sell (see the third chart). Of course, some areas have taken longer: notably Coromandel, Paihia, and Whitianga.
 
Median days to sell, last 12m (Source: CoreLogic)
 
Fourth, gross rental yields tend to be lower in most of these areas, with only Paihia, Tahunanui, and Coromandel notably above the national figure (see the fourth chart). Low gross yields from putting a property into the traditional rental market in Queenstown, for example, make it easy to see why Airbnb (which tends to have higher returns) is having a pretty big impact there.
 
Gross % rental yields (Source: CoreLogic)
 
 
Clearly, the areas we’ve covered here are also residential locations and aren’t just for holidays, with property values and market performance determined by all of the usual year-round supply and demand factors. However, any holiday-makers who were tempted into a property purchase in an area like Tahunanui 12 months ago will have even more reason to enjoy their break a year on.
 
Kelvin Davidson Senior Research Analyst. Mobile 027 355 3813,   Email: kelvin.davidson@corelogic.co.nz
 
Enquiries can also be directed to media@corelogic.co.nz
 
* We’ve used Motueka as a proxy for Kaiteriteri, given its close proximity.
 

NZ Vs Australia: A property comparison

Wednesday, 5 December 2018

 
With house prices now falling significantly in Australia, the inevitable question is beginning to arise: “will the downturn spread across to NZ?” We’re not convinced that it will, for three main reasons.
 
First, NZ does not generally have an oversupply of property of any type or in any region. Indeed, our largest city of Auckland has the opposite problem: a large shortfall of housing, which is propping up values even though property is relatively unaffordable in our biggest city. By contrast, it is widely accepted that there are too many apartments in Sydney and Melbourne, and this is dragging down prices. So-called settlement risk (where a buyer who purchased off the plans some time earlier suddenly walks away from the transaction) is a growing problem for some of these large-scale developments.
 
Second, NZ is yet to see the same increases to mortgage rates that other countries are seeing, including Australia. In fact, although there are now signs that it might be ending, the banks here have recently engaged in a “rate war” with borrowers enjoying some pretty sharp fixed-rate deals in recent weeks. On a related point, about 80% of mortgage debt is on fixed interest rates in NZ, giving borrowers time to adjust their finances in advance of an interest rate increase being pushed through to their mortgage. That is in stark contrast to Australia, where floating rates dominate.
 
Third, NZ’s regulators have arguably been much more proactive than Australia’s in curbing the riskiest lending practices. Interest-only lending is more controlled in NZ, and it’s also easy to forget that we’ve actually had the LVR restrictions (in one form or another) here for five years now. This has put our mortgage market on a surer footing than Australia’s.
 
To be fair, none of this precludes a housing market downturn here in NZ at some stage in the future. But for now, and with the labour market a huge support for property, we’re confident that Australia’s problems won’t be replicated in New Zealand for the foreseeable future.
 
 
-Nick Goodall, Head of Research, CoreLogic NZ
 
As much as I love getting stuck into a data heavy spread-sheet; I do get that not everyone is with me on that. Luckily, CoreLogic NZ has a very proud heritage and ongoing drive for geospatial excellence, so we can use that technical expertise to deliver the data story in a visual way too. 
 
We’ve just released our latest CoreLogic NZ ‘Mapping the Market’ report, which uses location analytics and geospatial expertise to give a visual understanding of New Zealand’s property market. 
 
When you’re actively on the property search journey, it really pays to know your facts, but the NZ property market is hard to keep on top of. This year we’ve seen some huge changes: which means understanding which suburbs really do match your budget can be a challenge. 
 
Just as the saying goes: sometimes, a picture really can paint a thousand words (or in this case, lines of data).  Mapping the Market is an updated visualisation tool which uses a geospatial information system (otherwise known as GIS) driven by millions of data-points in the background. The result is an easily interpreted explanation of the current property market. You can click on a particular suburb anywhere in NZ and instantly see its current median property value, but you’ve been warned! You can become a bit obsessive with it. 
 
It’s ideal for a homeowner to discover other suburbs that they may have previously excluded from their frame of reference but actually sit within their budget. It’s easy to see where these suburbs are too, because we used colour-blocking to show median values of one area relative to their surrounds…basically, anything dark purple means the suburb median is above $1.2 million, while the light orange sections show where you can still score property for under $450,000. 
 
The tool also demonstrates the beauty of hindsight, with a five year snapshot comparing median values in October 2018 to October 2013 to show how the value of property has shifted over time. Click between the 2013 and 2018 mapped visuals to see the values have shifted across suburbs in any major city.  
 
Complementing the visual demonstration, the interactive also provides some key market commentary with data highlights and trends for each major city. 
 
Use the CoreLogic ‘Mapping the Market’ tool for yourself at: https://www.corelogic.co.nz/mapping-market
 
New Zealand’s ‘more affordable’ main centres, particularly Dunedin and the wider Wellington region, continue to show a strong rate of growth in a cooling market.   
 
Dunedin, with a relatively affordable entry-level price coupled with attractive premium areas, continues to appeal to a variety of buyers, leading to strong quarterly value growth of 3.8%.
 
The wider Wellington region, with quarterly growth of 4.0%, continues to see values steadily increase as buyers continue to be attracted to the more affordable outer city areas such as Porirua and the Hutt Valley.  
 
At the same time, the ‘top-end’ of the market – those areas with average values above one million such as the Queenstown Lakes – are generally experiencing a cool down in market activity and growth.    
 
The latest QV House Price Index shows nationwide residential property values have increased steadily over the past year by 3.5% and by 1.3% in the three months to November. The nationwide average value is now $681,545.
 
Meanwhile, residential property value growth across the Auckland Region increased by 0.4% year on year and by 0.1% over the past quarter. The average value for the Auckland Region is now $1,050,647.
 
 
For a full breakdown of the QV House Price Index figures for November, please click here
 
QV General Manager, David Nagel said, “Our latest insight reflects what we’re seeing and hearing in the market; there is still plenty of activity taking place following the ‘spring surge’ in activity although value growth is fairly modest overall.”
 
“Dunedin and the wider Wellington region continue to lead the way, where value growth remains strong. These regions appeal to a broad range of buyers, particularly first home buyers and investors, due to their relative affordability and higher yields on offer. These factors enable the values in these regions to continue their upward trend, even in a cooling market.”
 
“The recently announced loosening of the LVR restrictions should inject energy into the market although I wouldn’t anticipate its impact will be overly significant. In the big scheme of things, it’s still a relatively minor change although it may result in new first home buyers and investors entering the market in the New Year, which could drive further value growth.”  
 
“We’re expecting more of the same throughout summer. The warmer months should continue to keep listings at a healthy level although the busy Christmas period may reduce activity slightly as people hold of selling until things quieten down in January and February.”
  
Auckland
Value growth remains slow across Auckland's suburbs. North Shore values rose 0.2% in the year to November and by 0.1% over the past three months. The average value there is now $1,215,601.
 
The former Auckland City Council central suburbs dropped 0.2% year on year and by 0.1% over the past three months and the average value there is now $1,239,592. Waitakere values increased by 0.6% year on year and by 0.6% over the past three months. Manukau values increased by 1.7% year on year and by 0.9% over the past three months; Papakura values rose 1.0% year on year but dropped by 0.6% over the last quarter and the average value there is now $698,825; Franklin values increased 1.8% year on year and Rodney values were up 0.8% year on year. 
 
QV Auckland Property Consultant, Hugh Robson said, “The market appears to be fairly steady at the moment and I am certainly noting a lot of activity from first home buyers.”
 
“We’re continuing to see that tidy or renovated properties in good locations are selling quickly and there is a lot of focus on new subdivisions.”  
 
Wellington
Values across the whole Wellington Region rose 8.1% in the year to November and increased 4.0% over the past quarter and the average value is now $685,387.
 
Wellington City values increased 7.4% year on year and by 3.5% over the past three months and the average value there is now $805,442. Meanwhile, values in Upper Hutt rose 8.8% year on year and 2.4% over the past three months; Lower Hutt rose 9.2% year on year and 5.8% over the past quarter; Porirua rose 9.3% year on year 4.6% over the past quarter. Finally, the Kapiti Coast rose 6.5% year on year and 2.2% over the past three months.
 
QV Wellington Senior Consultant, David Cornford said, “Record low interest rates and low levels of inventory are underpinning moderate value growth, particularly at the low-to-mid priced section of the market.”
 
“The recently announced easing of LVR (Loan-to-Value Ratio’s) for both first home buyers and investors is likely to inject a bit more activity into the market in the New Year, however it’s a relatively minor change to the current rules and we are unlikely to see a significant impact on value levels.”
 
“There is plenty of residential development going on throughout the region ranging from single dwelling developments through to large-scale subdivisions and apartment buildings. These developments continue to provide additional supply, however this is being offset by population growth which continues to fuel demand.”  
 
“Many of the new homes being constructed in the region will be out of the price range for first home buyers, however it will free up cheaper homes for these buyers.”
 
“Rents have significantly increased in the Wellington region over the last 12 months, particularly in the Hutt Valley and Porirua, and we’re likely to see a continuation of this upwards trend into 2019 until supply constraints are properly addressed.”
 
“Investors continue to be active in the market, attracted by high rents which are trending upwards.  At the same time, we’re seeing some investors offloading their investments due to impending legislation changes.”
 
Hamilton
Hamilton City home values rose 1.2% over the past three months and values increased 4.0% in the year to November. The average value in Hamilton is now $565,859.
 
Tauranga
Tauranga home values rose 3.9% year on year and by 1.2% over the past three months. The average value in the city is $713,859.
 
The Western Bay of Plenty market rose 2.3% year on year and 0.9% over the past three months. The average value in the district is now $640,530.
 
Christchurch 
It’s a continuation of recent trends for Christchurch City, with values either holding or dropping slightly. Values are slightly up year on year and also increased by 0.3% over the past three months. The average value in the city is now $495,742.   
 
QV Christchurch Property Consultant Hamish Collins said, “It’s appears to be a steady market at the moment, with a good level of activity leading into Christmas.”
 
“Early indications suggest there might be more investor interest following the LVR changes, so we’ll be following this closely in the coming months. At the same time, we’re also seeing tough serviceability criteria being applied by the banks.”
 
“Finally, we’re seeing a slowing of new builds particularly on the periphery of the city centre.”  
 
Dunedin
Values in Dunedin continue their upward trend having increased 11.7% in the year to November and 3.8% over the past three months. The average value in the city is $431,665.   
 
QV Dunedin Property Consultant, Aidan Young said, “Buyer competition remains high and we’re seeing well-presented properties in sought after locations generally selling quickly.”
 
“First home buyers remain active, particularly in the lower end of the market up to the $400,000 mark.”
 
“Multi-offers in tender sales remain common and there’s a good level of activity at auctions across all value ranges, which reflects the fact that Dunedin very much appeals to a broad range of buyer types.
 
‘Finally, open homes still appear very busy indicating that the market remains active following the spring surge in the lead up to Christmas”
 
Nelson
Nelson residential property values rose 8.0% in the year to November and by 1.6% over the past quarter. The average value in the city is now $597,533. Meanwhile, values in the Tasman District have also continued to rise, up 5.9% year on year and 0.1% over the past three months. The average value in the Tasman district is now $585,913.
 
QV Nelson Property Consultant, Craig Russell said, “Demand remains firm with first home buyers taking advantage of Kiwi Saver incentives and the record low interest rates on offer.”
 
“There was plenty of sales activity in November, with sales volumes up particularly in the low-to-mid value range.”
 
“A number of residential developments are being developed in Nelson and Tasman, which generally comprise of ‘cookie cutter’ type homes on compact sections. These properties are generally in the new home entry level price bracket of $550,000 to $750,000.”
 
“The recently announced easing of the LVR restrictions is anticipated to only have a minor impact on the market and it’s unlikely to entice an influx of investors back to the market given impending legislation changes.”
 
“Rents continued to rise during 2018, with the easing of these LVR restrictions unlikely to add sufficiently to the supply of rental properties which have a higher occupancy rate per household than owner-occupier properties.”
 
“The recent announcement to proceed with the Waimea Dam will provide vendors and prospective purchasers with surety in their decision-making process.”
 
Hawkes Bay
Napier values rose 10.2% year on year and by 2.0% over the past three months. The average value in the city is now $521,981. Hastings values are also continuing to rise up 5.1% year on year and 1.2% over the past three months. The average value there is now $465,441.
 
QV Property Consultant Nicola Waldon said, “We continue to see a low supply of properties although, as anticipated, we have seen an increase since the winter months.
 
“Multi-offer scenarios are relatively commonplace, which does indicate that demand remains strong overall. Falling interest rates are a key factor supporting the high level of demand and keeping prices flat or increasing slightly.”
 
Provincial centres
In the North Island, Kawerau, South Waikato and Opotiki lead the way in quarterly growth, with value growth of 18.5%, 14.0% and 9.9% respectively. In terms of annual growth, Kawerau led the way, up 25.5% followed by Rangitikei (22.4%) and Central Hawkes Bay (19.6%).
 
In the South Island, MacKenzie, Buller and Clutha regions lead the way in quarterly growth, with value growth of 8.7%, 5.6% and 4.7% respectively. Invercargill lead the way in annual growth, up 12.2%, followed by Clutha (10.7%) and MacKenzie (8.9%).
 

Annual change in values 

 

*Please note, our partners CoreLogic have incorporated an improvement to the methodology which underpins the November House Price Index figures. The change only concerns aggregated indices (i.e. where an index covers multiple Territorial Authority’s). This new methodology provides less volatility and a more precise measure of value changes. This change only impacts recent movements, with the historical series mostly not impacted. If you have any questions regarding the change, please get in touch with us by emailing communications@qv.co.nz