The demand for home renovations is booming, and suppliers of timber and building materials are reporting shortages and price increases as a consequence. For those working on home renovations, this has caused some projects to become delayed. Timber costs alone have reportedly risen between 6% and 15%, with the expectation that prices will continue to rise.
So what can you do if you’re one of the many homeowners currently thinking about home renovations? With higher prices and more shortages to be expected, this article looks at how you can maximise value in your home renovation.
Consequences of extreme demand
The extreme demand for renovations has been caused by a number of factors. Rising property prices, low-interest rates, and the impact of Covid-19 lockdowns have all contributed to a record number of renovation applications being approved. However, this has meant that materials are becoming scarcer and more expensive, and contractors are increasingly in demand too.
Materials shortages may mean having to be more flexible about what’s used for your home renovation. The labour shortage means it’s also more important than ever to be certain about the qualifications and skills of the tradespeople you use – poor quality work could lead to disputes, safety issues, and even higher costs.
Top tips to find trades and supplies in a booming renovation market
Look for recommendations on local facebook or renovation groups. A recommended trade is more likely to turn up to quote, which can be half the battle when sourcing trades for your renovation.
Don’t be afraid to source products direct from the manufacturer. Some manufacturers are happy to take orders directly from clients. For example, you can source your kitchen or cabinetry directly from cabinet makers and manufacturers, rather than going through a kitchen company that provides the full service. The cabinet makers can provide all the cabinets in flat packs so you can either DIY or organise someone to put them together. This can save money and also speed up the process. The only downside is you’ll need to provide all your own measurements and know exactly what colour and fittings (eg draw runner types) you want as the manufacturer won’t provide a design service for smaller jobs.
Contact local and wholesale suppliers to order products like timber, cement sheets and flooring directly. If you buy direct from a wholesaler rather than a retailer, you’re likely to save some money on the individual products, but also you won’t have to pay a builder’s margin if your builder supplied all the products.
How do you pay for renovations?
The spike in costs may leave some homeowners wondering how they can finance their renovations.
An overwhelming majority of people use their own savings to pay for their renovations, with 20% relying on their credit cards, and only 14% using equity or home refinancing to pay the bills.
Using your own money is, of course, a great solution, but not everyone has this option, especially given that costs are increasing and your savings may not stretch as far as you thought. An issue with relying on your credit card is that interest will keep accumulating, even if you can take advantage of an initial interest-free period. In the long run, this might mean your renovations turn out to cost a lot more than you expected.
Top tips to maximise value
A great tip for getting the maximum value from your renovations is to refinance your home to access the equity you have. With property values increasing dramatically and interest rates at a record low, this could be a worthwhile solution, especially if your mortgage has been in place for a couple of years. Home renovation costs can be included in the repayments, rather than utilising your cash reserves. Speaking with an experienced Sydney mortgage broker like Mint Equity will ensure you have access to over 40 different lenders and also find out what documentation you’ll need to provide to secure funding for your home renovations.
Another tip is to plan and budget your home renovations carefully and be realistic about what you can afford. Spend according to your home’s current value rather than what you hope it’ll be worth after renovations are completed.
If your dream renovations are out of reach at the moment, making less ambitious changes might be a solution, especially if you have a newer home. Cosmetic renovations can make a huge difference to the look and feel of your property, whilst costing significantly less than total renovations.