Selling? Repaint your house before you add an extra room
Big-ticket upgrades to your home, such as an extra bedroom or bathroom, in fact return the least on sale. This is according to Remodeling Magazine, which published a cost vs value report studying the past 30 years. And as it turns out, the most common home improvement projects, such as adding a bathroom or bedroom, recoup the least amounts on resale of the property: an average return on investment of about 64%, while smaller home improvements and repairs pay back an average of about 74%.
International trends echo in the South African context, with Gerhard Kotzé, MD of the RealNet estate agency group, saying that real estate agents see this all the time. “Less-expensive projects like repainting your home, or waterproofing the roof, or sanding and resealing your wooden floors usually generate much better returns on expenditure than big additions and alterations,” he says, quoting the study which noted exterior or “curb appeal” projects paying back an average of almost 75%, while interior projects returned just 63% on average. “And this also holds true for South Africa because we generally like to spend a lot of our leisure time outside, gardening or swimming or entertaining round the braai.”
South Africans, however, continue to build on their homes. According to StatsSA, for the three months to November 2016, square metres of additions and alterations plans passed grew by 3.89% year-on-year following a prior period of negative growth. Square metres of additions and alterations competed grew to 16.4% year-on-year for the three months to November, up from 4.4% for the three months to October.
The FNB Estate Agent Survey, which among other things records home maintenance and upgrades, notes that value-adding home upgrades accounted for 22.5% of the market in Q4 2016, down from 26% in late 2015.
“The percentage of ‘homeowners fully maintaining their property and making some improvements’ declined from 42.5% for the two quarters up to and including Q4 2015, to 32% by Q4 2016,” said John Loos, FNB’s household and property sector strategist. “The ‘percentage of owners not improving but still fully maintaining homes’ rose mildly, from 26.5% in Q3 2016 to 30% by Q4 2016.
“This all translates into a recent decline in the category that one would always like to see being low: The ‘percentage of homeowners attending to basic maintenance only’, a level which in effect means the home will ‘go backward’ over time. This estimated percentage was 17.5% for the two quarters up to and including Q3 2016.”
Owners allowing their homes to “get run down”, in the areas surveyed, remained a fairly insignificant 2% in Q4 2016.
“Spending money on a poolside patio or new thatch for the lapa is likely to give you a much better payoff, rand for rand, than a new kitchen or an extra bathroom. And it will still increase the appeal of your home for prospective buyers. In fact, kitchens and bathrooms are such personal spaces that a major revamp might not pay off at all if your dream makeover fails to impress a buyer that has totally different taste.”
New(ish) renovation themes catching steam and likely to generate increasingly good returns
installing ceiling insulation
grab bars in bathrooms
wheelchair-friendly countertops and sinks (in terms of height)
For the 2017 Cost vs Value report, click here