subject: Renovations Is No Longer Key To Profiting From Property [print this page] In a buoyant property market, the key to wealth was to purchase a run down, tired property, buy it at a discounted price, do it up and sell it for a premium. Many people across the country were taking advantage of this method of making money the so-called Sarah Beeney effect. Not only were people benefiting from the increased value achieved by modernising a property and installing new kitchens, bathrooms, loft extensions and conservatories, they were also benefitted from the increase in value over the period of time it took to renovate the property. The rise in prices was so rapid, that homeowners were making money in just six months even by doing nothing to their property.
It was a win-win situation, and many savvy investors were becoming increasingly rich using this investment method. However, this isnt the case today. Homebuyers are being warned that large projects such as extensions and conversions are no longer a good way to invest funds. It is failing to add value to the property and could even cause people to lose their investment.
According to The Annual Home Improvement Survey report carried out by HSBC while a new bathroom, conservatory, loft conversion or kitchen can still improve the value of your home and make easier to sell, the gains no longer impressive. A loft conversion is the most profitable project, adding value and boosting the price of your home by approximately 16,152, but this is still a fall from last years figure of 20,876 thats a drop of 23%. A loft conversion typically costs 20,000 to 30,000 so the profit doesnt exceed the cost in the first place.
After installing a new kitchen, the asking price has dropped 19% in the past year, and a new bathroom as dropped by 11%. The installation of a conservatory is the only home improvement that will improve the value of your home by an average 9,420. This is a 14% increase on last year.
With stricter lending criteria from lenders lots of homeowners are improving their property and creating more space rather than moving up the property ladder. This means that new features such as a conservatory, extension or loft conversion is no longer a distinguishing feature.
HSBC carried out the study based on interviews with 112 estate agents.
For more information about Bernie Wales please visit at http://www.berniewales.co.uk.
