For some homeowners, a knockdown-rebuild is the last thing on their mind. They’re preserving every aspect they can to avoid huge repair bills, abide by restrictions under heritage listings, or preserve any savings for a bigger, better, new home. But recently, the property market is bearing witness to a shift in behaviour for those homeowners looking to upgrade. Where subdividing or selling up was previously the primary strategy, knockdown-rebuilds on existing blocks are now a far more attractive and viable option.
In this article, we’re exploring what’s driving this shift, what it means for the Australian property market, and which type of home makes a good candidate for a knockdown-rebuild.
Why demand for knockdown-rebuilds is surging
Changes in the property market are always driven by economic and social conditions, and the move towards knockdown-rebuilds is no different. Currently, demand for properties – both for sale and for rent – is at an all-time high, influenced by a decade of population growth and hyper-inflation. With demand soaring, there are less blocks of land and properties available to purchase for today’s buyers.
At the same time, a low interest rate and dramatic increase in property value over the last decade has helped many homeowners gain more equity in their home. With more money in their pockets, home owners have more cash to spend on improving their house – whether that’s adding a nursery or re-doing the kitchen.
When the market is so highly competitive, staying put, redrawing on their mortgage and building their dream home in a knockdown-rebuild is often the cheaper and simpler option.
Why knockdown and rebuild?
There are lots of reasons people knockdown and rebuild, but the most common one is that the property simply doesn’t meet their needs, and the cost of renovating is equal to or greater than the cost of knocking down and rebuilding. A family living in a two-bedroom, one-bathroom home wishing to upgrade to a four-bedroom, two-bathroom home, may end up paying more to do that than simply to knock the house down and start again.
The knockdown-rebuild process also allows owners to create the home of their dreams – the materials, colour schemes, and layout they want – unencumbered by the property’s existing features and structural makeup.
With a new Labor government, there are undoubtedly more changes in the market conditions ahead that may impact the growth of the knockdown-rebuild trend.
The ALP aims to tackle housing affordability with its Help to Buy scheme, whereby eligible home buyers with a minimum 2% deposit can purchase a home with the government’s help. Under this scheme, the government would cover 30% of the cost of buying an existing home and 40% of the cost of building a new one. With this scheme targeted at low to middle income earners, it’s hard to say if this will impact the type of buyer seeking a knockdown-rebuild property.
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