Renovations are more popular than off-the-plan because people have more control over their home

As outlined in my recent post, it is interesting to ponder why ‘construction costs’ is so high on the Missive search button list.  

We know that much more of the ‘new’ housing dollar is being spent on renovations. 

Some estimate that just over half of the money spent on residential construction is now spent renovating rather than on new builds. 

Others estimate that the Australian renovation market has more than doubled in size (dollars spent) since the early 2000s.  

I think there is much more at play here than just economics.  

It’s true that the increase in taxes and charges on new property (GST, infrastructure charges, stamp duties etc.) has had a negative impact on new housing demand. 

This goes some way to explain why new house building is at record lows (in per capita terms), but it doesn’t fully explain the rapid rise in renovations.  

Several things come to mind:  

Increasingly, we feel we have less control over our lives: post 9/11- threat of terrorism;  lack of political leadership;  the internet;  media sensationalism;  our general lack of fortitude – we scare so easily theset days;  no nation building projects.

This list could go on and on.

And so undertaking a renovation is one way of controlling our environment. 

We aren’t confident enough to make a big move and buy something new.  

What defines a home isn’t the property itself, but more often than not, it is defined by the spaces around it.

Housing or the idea of a home, is bound up with a vivid sense of place.  

This seems lost on many of today’s planners, even architects and especially developers. 

If you listen to buyers (including investors), they will describe what surrounds the property and how the building itself interacts with this space, rather than the dwelling itself.  

It’s not just about what the project looks like but how it fits into its immediate surrounds. 

It is much more than just a property’s location or in which suburb it sits.  

There is pride at stake. 

Too few new residential developments evoke a sense of pride.  An owner must be able to say, with a degree of self-importance, that I live here (or own one of these).  

I cannot help but think that too many new developments look pretty crappy and also lack this vital connection between the property itself and the surrounding space.  

Too many lack a sense of place.  

Taking this line of thought further, we all seem to want our own place.  This want for my place is one reason why renovations are replacing new development.

Renovations can allow us to make space more suited to me.  Whilst renovating often means adding space – a home within a home so to speak – renovations also aim to improve space and this is the point when it comes to new development.  

Potential buyers tell us that it is the carbon copy nature of new development (rather than the amount of it), their lack of input in the final product and the strict rules of its use that stop them from buying something new.  

It seems to me that new development these days plans out all of the non-profitable components.  For example, the best medium-density housing developments incorporate plenty of built-in space where incidental contacts occur naturally.  

Why can’t off-plan buyers – who financially qualify – make changes to certain things like kitchen and bathroom layouts? 

Many more would buy if they could do so.  

Why can’t new projects design in some flexibility, suchas  internal walls that moveor multi-functional spaces?  

We want bespoke, even if is just a tiny bit.  

And whilst a cost burden, many accept body corporate fees, but the rules associated with living under such a system seem antiquated to say the least.  

Yes there are plenty of economic reasons why what I have outlined is difficult to implement,  but these are some of the reasons why new dwelling sales remain low and renovation activity is on the rise.  

The want for my space helps explain why, in many Western societies, houses are expanding while households are generally shrinking.  Children used to share bedrooms a generation ago. 

My grandparents never said I need some space,  but my kids, our parents and my wife and I do.  

Michael Matusik is the founder of Matusik Property Insights, which has helped over 550 new residential projects come to fruition.  Read Michael’s Blog or follow him on Facebook and Twitter  or connect via LinkedIn.