Renovated properties attract premium across Sydney as surging building costs discourage new projects

Skyrocketing construction costs have turned fully renovated homes into a scarce commodity in Sydney and many are changing hands for record prices, despite the cooling property market.

A report by valuer group Herron Todd White revealed lengthy project delays, rising materials costs and challenges in getting tradies on site were discouraging homeowners from starting new improvements.  Others were abandoning their projects before scheduled works were completed and relisting the properties for sale.

It’s resulted in a shortage of fully renovated properties available for sale at a time when home seekers are increasingly choosing turnkey properties where no work is needed.

Ray White chief economist Nerida Conisbee said the few renovated homes available were attracting strong competition.

“Finding a renovated property can be challenging in many areas and they’re the properties most buyers want,” she said.  “Few people are prepared to renovate. There is an awareness that tradies are harder to come by and it’s more expensive to build.”

Herron Todd White revealed in its latest monthly market review that a key reason homeowners often struggled to find tradies willing to do renovations was because of more lucrative jobs on new housing estates in areas like Sydney’s southwest.

“Tradespeople are drawn towards the bigger jobs of building a home which comes with financial certainty and stability compared to one-off renovations,” the report said.

Surging materials costs and global supply chain disruptions were also making it harder for tradies to make a profit on jobs they quoted on months ago and many smaller companies were closing shop, HTW reported.

Homeowners who recently sold fully renovated or newly built houses in established suburbs often secured record prices.

A recently completed house on Tripod St in Concord sold off market this week for $7.7m – a new record for the inner west suburb.

And in Earlwood, a duplex sold for just over $2.17m, a suburb record for an attached house in the suburb. Similar records were set in Kensington and Kingsford.

Agent Dib Chidiac, who sold the Concord house, said buyers who wanted modern houses in older suburbs would have to compete with cashed up home seekers prepared to spend big.

“They will pay top dollar because they don’t want to do the work. It’s very different from what we had over the last two years,” Mr Chidiac said.

“What we had then, was lots of people renovating because prices were going up at this crazy rate. Some people who needed to move to a bigger house would try to extend their houses instead to avoid paying stamp duty. Now people think renovating will be too hard.”

Adrian Tsavalas, director of property group Adrian William, said buyers now had the attitude that “renovator’s delights” were best left to professional builders.

credits to Aidan Devine, realestate.com.au/news