Introduction
It has been a busy start this year for XL BUILT as Melbourne braces itself for an extension and renovation frenzy in 2024. Homeowners are seizing the opportunity to secure extension builders and capitalise on the current stabilisation of building costs before an anticipated surge in demand later this year. With projected interest rate cuts on the horizon, trade shortages and price hikes loom, prompting proactive homeowners to act swiftly.
In line with forecasts from the Housing Industry Association (HIA), 2024 is poised for a extension and renovation boom. Central to this projection is the stabilisation of building costs, rendering extensions and renovations more financially feasible for homeowners. HIA chief economist Tim Reardon underscores the significance of potential interest rate cuts and a strengthening economy, which are expected to drive an uptick in home extension activities.
Reardon also emphasizes that the substantial growth in house prices over the past four years has positioned home extensions as a notably cost-effective alternative in comparison to the escalating value of homes. Highlighting this trend, HIA’s Reardon points out that the average price of a newly approved house in the September quarter surged by 11.5 percent year-on-year. This upward trajectory in house prices, coupled with the concurrent increase in property values and individuals’ wealth, has fostered a growing preference for extending and renovating over relocation among homeowners.
In this article, we will explore why now is a good time to engage a home extension builder in Melbourne, taking into account various factors like moving costs, interest rates, trade availability, government initiatives, stable material costs, and efficient council Town Planning approvals.
Disadvantages of Moving House and the Value of Home Equity
Moving house can be a daunting endeavor, often accompanied by numerous disadvantages. One significant drawback is the increased interest rate you may have to pay on a new loan. When you consider the costs of selling your current home, buying a new one, and dealing with moving expenses, it’s easy to see how these expenses can quickly add up. Stamp Duty alone attracts an additional tax of approximately $110,000 on a median priced home. Additionally, with fluctuating housing market conditions, there’s no guarantee that you’ll find a new property that meets all your needs without breaking the bank. In contrast, leveraging your home equity to fund a home extension can be a smarter and more cost-effective option. It allows you to enhance your current living space, add value to your property, and potentially enjoy lower interest rates compared to securing a new mortgage. By investing in your existing property, you not only avoid the hassles of moving but also create a more tailored living environment that suits your family’s evolving needs.
Increased Home Value
Expanding your Melbourne home through a well-designed extension is a shrewd investment strategy in the city’s competitive real estate market. This move can significantly increase your property’s market value over time, capitalising on the historical trend of steady property appreciation in Melbourne. Not only does it meet the growing demand for functional living spaces, but it also positions your property as a standout choice in the market. Buyers and renters alike are often willing to pay a premium for well-maintained, move-in ready homes with modern amenities, and a home extension allows you to provide just that. Moreover, as Melbourne continues to attract new residents, an extended home can cater to evolving lifestyle needs, future-proofing your investment and ensuring long-term returns in the dynamic Melbourne real estate landscape.
Stable Material Prices and Trade Availability
In the realm of home extensions and construction projects, timing is important, and the near future looks promising for those considering adding extra space. Experts foresee a favourable landscape in Victoria with stable construction costs. Several key factors contribute to this optimistic outlook. Firstly, an increase in geopolitical stability not only fosters confidence but also encourages long-term investment in construction. Moreover, the ever-expanding opportunities for global trade and a surge in infrastructure development projects create a conducive environment for Melbourne extension builders and homeowners alike. Additionally, the availability of qualified construction labour plays a vital role in cost control. With a steady workforce, project costs can remain manageable. In summary, the convergence of these factors paints a promising picture for those considering home extensions, making now an opportune time to embark on such projects in Australia.
Government Delays Construction Code Changes
Victorians looking to build have received a significant relief of up to $40,000 as the Victorian government postponed a pivotal change affecting the construction sector. Initially slated to commence from October 1 2023, alterations to the National Construction Code mandating a seven-star energy efficiency standard and accessibility features for homes in Victoria have been deferred until May 1, 2024. This delay has been welcomed by industry insiders who estimate the additional costs of compliance to be around $30,000 to $40,000 per home, potentially more for larger constructions.
The postponement also offers an opportune moment for buyers to capitalise on lower housing costs before impending changes take effect. Notably, the delay provides breathing space for those with unconventional block layouts, allowing them to explore options without facing exorbitant expenses.
Negative Effects of the Government’s Upcoming ‘Big Housing Build’ Project
The government’s Big Housing Build project, while aiming to address the critical issue of housing affordability and availability, may have potential negative impacts on the construction industry. Firstly, the massive influx of government-funded housing projects could lead to increased competition for skilled labour and resources within the construction sector. As more construction companies and contractors vie for the same workforce and materials, it could drive up labour and material costs, including for home extensions and renovations.
Additionally, the sheer scale of government initiatives may divert the attention of experienced professionals and tradespeople away from private construction projects, causing delays and disruptions in the timelines of non-government ventures. This could be particularly concerning for homeowners seeking timely completion of their home extensions or renovations. Furthermore, an increased emphasis on government-backed projects may deter private investment in the construction industry, which could, in turn, limit innovation and hinder the overall competitiveness of the sector. Balancing the positive social impacts of the Big Housing Build project with its potential negative ramifications on the construction industry will be a challenge for policymakers as they work to address housing issues in Melbourne.
Faster Council Approvals
In recent years, the surge in construction projects in Melbourne led to extended waiting times for council town planning approvals, frustrating both homeowners and builders alike. However, there has been a noteworthy shift in the approval process lately.
One contributing factor to the recent acceleration in council town planning approvals is the alleviation of the council’s workload. The earlier construction boom had inundated local councils with a high volume of applications, causing delays due to resource constraints and extensive review processes. However, with some of the large-scale projects now reaching completion and the construction frenzy somewhat subsiding, councils have more bandwidth to dedicate to individual applications. This reduction in their workload allows for a more thorough but expedited evaluation of proposed construction projects, ultimately benefiting homeowners and builders seeking quicker approvals for their projects in Melbourne.
Conclusion
In conclusion, the decision to embark on a home extension in Melbourne at this juncture is not only a practical one but can also be a financially astute choice. Avoiding the disadvantages of moving, harnessing the value of home equity, and leveraging the potential for increased home value in Melbourne’s competitive real estate market are compelling reasons to consider extending your current living space. Additionally, with stable material prices, improved trade availability, and expedited council approvals, the timing couldn’t be better. However, it’s important to remain mindful of the potential challenges posed by the government’s Big Housing Build project, as it could affect the construction landscape in unforeseen ways. Nonetheless, with careful planning and a well-executed extension project, homeowners can seize the opportunity to enhance their living spaces, cater to their evolving needs, and ultimately thrive in Melbourne’s dynamic real estate market.
Ready for Your Dream Extension or Renovation?
If you’re ready to embark on a journey to transform your own living space, we invite you to connect with the XL Built team today. Let us bring your vision to life, creating a space that honors the past while embracing the future.
