Townsville buyers want ready-to-go over reno – realestate.com.au

News Corp Australia Network

Townsville homebuyers are on the hunt for picture-perfect established homes and shying away from anything that would require builders, according to the latest Herron Todd White market analysis.

The September Herron Todd White Month in Review looked at the springtime renovation market across Australia and found the continued rise in building costs had made buyers wary of building and renovating.

Townsville-based Herron Todd White valuer Hayden Lynam said many local buyers were opting for homes they could move straight into and shying away from fixer-uppers.

“While construction costs continue to increase along with rising interest rates and the increasing cost of living and inflation, the level of activity in the renovation sector will likely remain limited and these factors will continue to make profiting from such works more and more challenging,” he said.

Mr Lynam said Townsville dwellings that had been recently renovated and well presented at time of sale were attracting a premium and a strong level of interest from prospective buyers.

“This continues to be the most desirable and strongest performing sector of the market at present,” he said.

Mr Lynam said properties that could benefit from minor upgrades were not attracting premium prices, however were still selling well.

“This section of the market is mainly price point driven with strong sales still being achieved across all sectors of the local market,” he said.

“The traditional do-upper sector of the market is presently being dramatically impacted by the significantly increased costs of renovation works currently compared to years prior.

“Opportunities still exist for renovators of properties in well-regarded locations when purchased at lower price levels and only requiring cosmetic renovation works to profit from on completion.

“These opportunities however are limited and there can often be hot competition for properties in this scenario.

“The profit margin for renovators is tighter in the more traditional residential suburbs and the present costs of renovation works are often outweighing the added value of completing the renovations in the current market.”

Herron Todd White director, Janine Rockliff, said across the country many buyers were shying away from building new homes due to cost.

“Construction costs continue to rise,” she said.

“Trade shortages are the main driver; material supply seems to have stabilised for now.

“The prediction is cost rises between eight and 15 per cent across the country and this is on top of the cumulative effect of the increases since the introduction of the home builder grants, other government incentives and supply shortages.

“For example, in the regional locality of Beaudesert which is an hour from the Gold Coast and Brisbane, a standard project style, turnkey four-bedroom, two-bathroom, double lockup garage dwelling with a gross floor area of just under 200sq m cost $205,000 or around $1060 per square metre in 2019.

“A similar house is now $366,000, or $1725 per square metre.

“Purchasers are wary of signing new construction contracts with cost increase clauses and a high proportion of provisional sum and prime cost amounts.”

Ms Rockliff said buyers were also concerned about the liquidity of builders, with Victoria, Queensland and Western Australia experiencing several construction company collapses, while securing a builder able to start within a reasonable time frame to reduce holding costs was also a challenge.

“This continues to drive the market to seek new or recently constructed homes and pay a premium for not having to go through the stress of a new build,” she said.

“In some areas, renovated dwellings that have been upgraded to a high standard are attracting similar interest as new, albeit not as high a premium.”