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“Turn-key properties” are defying Sydney’s housing downturn as buyers show they are willing to pay a premium to not have to renovate.
It is a change from the start of the year, when home owners were paying top dollar for original homes, as it was their only way of upsizing due to rapidly rising property prices.
Home buyers are paying top dollar for move-in ready homes.
Since then, the huge increase in the cost of building materials and tradespeople, coupled with long wait times for projects big or small, has turned many home buyers off properties that need work.
Housing Industry Association chief economist Tim Reardon said home buyers are prepared to pay for certainty in a fast-changing economy.
He said the time taken to build a house or embark on a major renovation increased from seven months to more than a year since the pandemic began, a cost too expensive for many families to bear as inflation bites and prices soar for rents and essential goods and services.
The uncertainty over the cost of building materials and when projects will be finished has deterred homebuyers from fixer-uppers.
“If you’re building a home you’re either going to stay in your old house, or for lots of people you’re renting … which just adds to the cost of building,” he said. “Which is why people are prepared to pay a premium for a turn-key solution.”
Buyer competition has been heating up because there are few move-in ready homes on the market due to the backlog in construction triggered by the boom, Reardon said.
For upgrader Joanne Stone and her family, buying a bigger home made more sense than embarking on another renovation project.
“We were planning on renovating because like many Australians in a post-COVID world our house didn’t meet our needs anymore,” Stone said.
“The big consideration for us was that building costs just went up and up and the uncertainty of building costs meant we were better off selling and buying what we needed.”
Joanne Stone, Michael, Nikita (right) and Stella (centre) have just sold their Epping home and are buying nearby.Credit:Nick Moir
Their selling agent Catherine Murphy of The Agency North said move-in ready homes did not struggle to find buyers willing to compete at strong prices.
“The ease of being able to move straight in and not have to get trades over the January break while most of them are on their annual holiday is very enticing,” Murphy said.
Murphy sold 33 Marcella Street in North Epping, a renovated four-bedroom house on a 769-square-metre block, for $2.4 million under the hammer.
Meanwhile, she sold another four-bedroom house on a larger block at 179 Norfolk Road for $860,000 less. The home had lingered on the market two months post-auction as it struggled to find a buyer willing to commit to the amount of work needed.
It is a similar story across the city. In Marrickville, an owner-occupier who had been in the market for the past year broke the suburb record, buying a restored five-bedroom house at 18 Harney Street for $4,280,500.
The home, which was on 1100 square metres, was guided at $3.5 million and was strongly contested by three of the five registered buyers.
Selling agent Rhonda Yim of BresicWhitney Inner West said home buyers raised concerns about rising costs and being time poor.
“I’m telling [vendors] it at least has to be liveable because people can’t afford to rent it out or not move in straight away,” Yim said.
Nearby, another five-bedroom house at 10 England Avenue sold for $3.71 million despite having an extra 400 square metres because it needed an update.
The renovated home market is so tight that selling agent Peter Grayson of BresicWhitney Hunters Hill said buyers were willing to pay a premium for done up properties even off-market.
Grayson sold a four-bedroom house on 335 square metres at 12 Lyndhurst Street for $2,535,000.
“The demand for turn-key is certainly peaking as people get more time poor and as the cost of renovations, builders and constructions increases,” he said.
His sale fetched more than $800,000 than a nearby knock down property at 26 Western Crescent, even though it was on larger land.
“Gladesville supply is still relatively low especially for properties that are finished and renovated,” Grayson said.
Selling agent Maclay Longhurst of BresicWhitney Inner East sold a three-bedroom Paddington terrace at 45 Dillion St for $3.3 million. It sold for over $1 million more than a fixer-upper at 74 Underwood Street, bought by local builders.
“If someone who is buying something undeveloped they are 12 months away from finishing. Developed homes are more popular,” Longhurst said.
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