Canberra buyers shift from potential renovations to turnkey properties

Canberra’s property market has gone through some serious shifts in recent times, many of which have arguably created a better and more balanced market. 

However, among many of these trends, some have suggested seeing a heavy shift to buyers seeking turnkey properties, rather than homes that may require more work and maintenance. 

There could be many factors for this shift among buyers, but the increased costs of materials and trades labour may be the main drivers. 

The CoreLogic Cordell Construction Cost Index recorded a rise of 11.9 per cent for the 12 months to December 2022, which was largely driven by the costs of timber and other building materials.

“Based on the people I am speaking to, unless they are in the trade themselves and can apply a bit of sweat equity and only pay for materials, renovations are a little out of reach at the moment,” Adam Jones of Blackshaw Gungahlin said. 

“Building costs have increased, so rather than doing that extension, renovation or facelift to a home, I have seen people selling up and buying something established, because the cost is just outweighing the benefit.”

This is a stark difference from the pandemic period when the federal government announced its HomeBuilder scheme. 

A $25,000 grant, which was announced in June 2020, was given to eligible applicants towards building a new home or renovating an existing one. The grant had a large uptake in the ACT, with a total of 2843 applications as of April 9, 2021, and 667 for renovations. 

However, Nik Brozinic of Carter and Co Agents agreed that there has been quite a decrease in renovation spending.

“Recent events, such as extensive floods, the war in Ukraine, material and labour shortages, heavy rain delays and land supply shortage have truly created the perfect storm in the property industry,” he said. 

“With inflation and interest rate hikes to rein it all back, a lot of the renovation market has been delayed unless it is more at the top end, where there may be more appetite for discretionary spending on renovations.”

In Brozinic’s experience though, he said that most of the buyers he has seen leaning towards turnkey properties have been first-home buyers, or those looking to downsize and have less maintenance. 

He also added that these turnkey properties, tend to be in newer, developing suburbs and are more suitable to market conditions currently.

“Typically these homes are at the more affordable end of the market, with the increase in interest rates, people are more open to compromise on creating their new family homes due to an affordability perspective,” he said.

It’s not shocking that buyers, especially families, are steering towards newer and established properties, slightly farther away from the city centre. 

Many have great quality schools, good public transport, and new builds, however, the biggest pull in the market currently, is still well-built and nicely renovated homes in central, established suburbs. 

“In my experience currently, the highest demand is for renovated homes in established suburbs, and then next is new suburbs like Moncrieff, Taylor, Denman Prospect, Coombs and Wright – those are in high demand,” Jones said. 

“But the properties that get ‘out of the box results’ are very well renovated properties that have been tastefully styled in well-known established suburbs.”

Despite the trend shifts, both agents can agree that, in general, the Canberra market is in a fairly positive place. 

“The market isn’t as bad as what is being portrayed. I am seeing people living comfortably in their homes who have been there for five or six years,” Jones said.

“In general, I am seeing people who are prepared to ride the market out for now and wait for it to correct itself. People are just sitting tight more than anything.”