House values in Melbourne declined and supply for homes has risen–the housing market is cooling down, and many investors are at a loss for what to do.
Melbourne housing values are up by approximately $24,200 since the start of COVID-19 in March 2020, and home sales are trending lower. More houses are available and spend more days on the market; less competition for homes means buyers are gaining back leverage.
A cooler housing market doesn’t need to cause too much alarm, considering the multiple courses of action that investors can take while they’re planning their next move.
If an investor has put their house on the market and hasn’t gotten any results, then their timing or the condition of the property could be behind it. Some family homes won’t be sold by their pristine condition and prime location alone. Many factors are behind why properties don’t sell or spend a much longer time on the market than expected:
- The home could be overpriced
- Renovations may not respond to buyers’ needs
- Lack of marketing for the listing
- Poor first impressions of the home
- The property just isn’t ready to be sold
In the face of these conditions, property investors can take the time to look into doing timeless, value-adding updates to their homes to help improve their chances of selling in a better property market climate.
It’s important that renovations are aligned with market expectations for the area, and won’t end up as costly upgrades that buyers are unwilling to pay for anyway.
What upgrades add value to an investment property?
Buyers want to view a bright, inviting and tastefully designed property that has all the features of a new home standard to the area, so it’s important to keep that in mind and not go overboard with passion projects or luxury improvements.
There are four main types of home renovation: basic feature updates, passion projects, curb appeal and value-for-money improvements.
Home design trends in the post-pandemic era focus on comfort, flexibility and energy. People do more than just unwind after a busy day; they want their homes to reflect their dynamic lifestyle. Updating the basic features of your property will allow potential buyers to do multiple activities in different kinds of spaces, whether it’s for professional, leisure or entertainment needs.
In terms of answering leisure needs, passion projects provide additional features to the home, but if they take away space from more important amenities like covered parking or additional storage, then buyers are unlikely to pay more for these premium additions to a potential home.
Of the four, curb appeal and value-for-money improvements can help improve the resale value of a home.
Curb appeal updates refer to those that boost first impressions; well-manicured front lawns, simple but decent landscaping, fresh paint and new address numbers do more than you’d expect to increase a home’s chances of being sold. Aside from these improvements, tasteful lighting that makes the property look modern, bright and inviting can also make it appealing.
Focusing on value-for-money improvements tends to recoup 80% or more of their cost at resale, and these include projects like full kitchen renovations, new flooring, upgraded bathrooms, plus roofing, siding, doors and windows.
5 investment property upgrades that add value
The kinds of improvements that will boost your property’s chances of being snapped up by your ideal home buyer are doable at a cost significantly less than buying another property and can make the most of the time you have while the market is slowed down.
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Painting, siding or veneer
Painting, siding or updated veneers are subtle improvements that make a difference in the presentation of your home and are relatively easy to do.
The cost to repaint a home is generally less than the cost of other improvements; even if investors decide to hire tradesmen for the update, this would still be cheaper than other renovation projects. If you’re unsure about the colour, pale yellow homes tend to sell faster. The colour brings people joy and the sense that brighter times are ahead.
Replacing siding, which is slightly more labour-intensive and could cost more depending on what material is used, makes a home look durable and structurally sound. For lightweight materials, fibre cement holds up well against wear and tear and is resilient against fire, rot and termites. If you’re after another look, stone veneers are an option to increase sale value.
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Energy-efficient (and cool) roofing
One of the most pressing concerns of homeowners and buyers is finding ways to bring down their electricity bills, especially since keeping a home cool in the summer is an increasing challenge.
Cool roofing materials reflect more sunlight and absorb less heat than traditional ones, decreasing the energy used to cool the home. It’s similar to how light-coloured clothing keeps you cool on a sunny day; cool roofing lowers the temperature of the building as a whole.
You have multiple options when it comes to roofing: reflective coatings, sheet coverings, tiles, and shingles, as well as metal roofing. These all come at a lower cost and will be appreciated by prospective homeowners who are all looking for ways to keep cooling expenses low.
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Kitchen countertops and storage
It’s easy to go overboard thinking of new ways to spruce up a kitchen because it’s the first place most buyers look for updates. At the end of the day, a kitchen needs to have counters that are easy to maintain, energy-efficient appliances and enough storage space for a pantry.
A kitchen renovation doesn’t need to be showy and outfitted with every available top-of-the-line feature, especially if the area is known for homes with modest but decent kitchen amenities.
Popular countertop materials are engineered quartz and granite, which suit multiple interior design preferences and tend to be simpler to maintain than others. Cabinets with ample storage that come in white or grey complement the look of these practical countertops.
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Bathroom modifications
Upgrading a bathroom can mean a project as straightforward as restoring the surfaces of existing sinks, toilets and tubs or as intensive as converting traditional showers into curbless or zero-threshold showers.
Zero-threshold showers refer to a continuous run of floor tiles from the main bathroom area into the shower and incorporate a round drain in the middle of the space rather than a trench-like one at the door, giving a streamlined and contemporary feel to a bathroom.
Sticking to timeless, subtle palettes and materials like off-white subway tiles and new silver chrome fixtures appeals to both modern and contemporary tastes.
Like in the kitchen, sticking to a more muted palette and type of material for any countertop upgrades in the bathroom will make the difference and elevate the space. These take mobility problems into consideration because there are no barriers to trip over.
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Landscaping and outdoor spaces
It matters what a property looks like as a potential buyer is driving up to the home and getting out of their car, so investing in landscaping that’s relatively easy to maintain is a major draw.
If there are no established trees on the property, planting perennials or adding a hedge will improve its look while also helping stave off soil erosion and water runoff during storms.
Decks and patios are valuable outdoor living spaces that buyers look for, now more than before the pandemic. The cost of adding a deck or patio depends on the material used, but investors can assess what aligns with their budget and the standard in that area.
Wood decks are cheaper to install but tend to require more upkeep over time. Composite decks are more expensive because they’re tougher against the elements. Whether you choose one or the other, homeowners will view a deck as a valuable outdoor living space.
Whether you’re going to take on only a few of these improvements or are figuring out what to do next, upgrading your investment property can boost its value while you weather the slump.
Still wondering how you can upgrade your investment property to get the most value for your money in a cooler housing market? Reach out to our agents and we’ll provide industry professional advice on your next move.