Flipping success across Sydney comes from matching market needs
No one should underestimate how home improvements contribute to Sydney's rising residential prices.
We are going through a renovation boom, with time poor buyers willing to pay extra if the renovation is completed to a high standard.
Rather than undertaking the work themselves, strong demand is being shown by buyers for quality renovations completed, valuers Herron Todd White have advised.
They note the popularity of renovation shows on television, sees more and more people jumping on board.
Channel 7’s The Aussie Property Flippers program recently featured a Tamarama property. The small Fletcher Street two bedroom, one bathroom unit was purchased in early 2016 for $780,000. With a renovation cost of around $80,000, the 58 sq m property sold last December for $1.065 million.
In Sydney’s CBD a one bedroom, one bathroom unit with car space in a converted heritage Clarence Street building was purchased in early 2016 for $710,000.
After full renovation to a high standard it sold in April for $1.13 million.
There has been limited flipping within the prestige market but one was in Bellevue Hill where $3.9 million was paid in 2015 and $5.75 million secured recently after what HTW noted was "a good quality cosmetic renovation,.
Agents says sellers across Sydney who've undertaken very basic renovations are not doing as well as those who undertake more extensive renovations.
But HTW warn one of the biggest mistakes renovators can make is to over capitalise.
"This is more common in suburbs with lower price points where even minor blowouts in budgets can result in an over capitalisation," their June report advised.
"The best way to ensure this doesn’t occur is look at any examples of the end product that have sold in the local area.
"If sales of renovated properties are within a certain price point it will give you a target and assist your budget to ensure the project will stack up."
Success was secured at a Smithfield property purchased in original but poor condition in early 2016 for $575,000.
The property was fully renovated, slightly extended and reconfigured to include an additional fourth bedroom and bathroom.
It then sold in March for $860,000.
With the renovation carried out correctly to meet market demand in the area, the success represented a 50 percent value increase in just over 12 months, albeit HTW noted that overall market growth had a big part to play.
The strong market conditions over the past few years has certainly been a major factor in not only the profits made but also lifting the confidence of the people undertaking these renovations.
There aren't just the flippers of course.
There have been increased number of frustrated home owners seeking to add value to their current properties rather than upgrading amid the recent price surge and listings shortage.
This article first appeared in the Daily Telegraph.