–Renovators relist pricey dumps after discarding plans to flip them

November 17, 2017

RENOVATORS inspired by hit shows such as The Block have struck a brick wall in a cooling property market, reselling uninhabitable homes they bought for millions after abandoning plans to flip them.

Sydney’s softer housing prices have lowered the potential profits renovators can make from home transformations.

Many inexperienced speculators are also backing away from projects after realising the true scale of the work required to fix their properties up.

The owners now face reselling the homes in a changed market where the appetite for so-called “renovator’s delights” has waned, making it harder for them to recoup the lofty prices they paid — often hundreds of thousands of dollars above expectations.

Real Estate Institute of NSW president John Cunningham said many of the properties would be challenging to sell because buyers were becoming reluctant to purchase “C-grade” properties following a nearly 20 per cent spike in the number of homes for sale compared to a year ago.

“They have other options now,” he said. “In the boom, every property was getting a great price. Now buyers only want something if it ticks all their boxes.”

Figures from research group CoreLogic showed the housing market likely peaked in April, with the citywide median home price falling 0.6 per cent over the past three months to $905,917.

Many of the owners of derelict properties were likely picking up on the changed market and wanted to resell the homes before the market weakened further, Mr Cunningham added.

Others were discovering how much effort their projects would require after getting a false sense of renovating from hugely popular free-to-air and cable TV programs such as The Block, Selling Houses Australia and House Rules.

“Most people underestimate their renovation costs by about half,” Mr Cunningham said. “There are always hidden costs and buyers usually expect it to be easier than it really is.”

Among the rundown properties that have returned to market is a three-bedroom house at 3 James Lane in Balmain East up for auction November 30 with a guide price of $3.3 million.

The owners purchased the property in 2016 off of another renovator who gave up on restoring the 1857 home two years after buying it for $2.68 million — a price $830,000 above the reserve at auction.

Together the two owners have cleaned up the jungle of vines and weeds once growing up the side of the house and stripped the interiors to wall and roof beams.

Listed with agents Matthew Hayson and Rosemary Chen of Cobden and Hayson, the home remains dilapidated despite the clean-up and could still cost more than $1 million to repair.

The property is on a prized 424 sqm block about 200m from Balmain East ferry wharf but, despite its popular location, there aren’t many potential buyers, Mr Hayson said.

“Only a few buyers are excited about it,” he said. “It’s a property you have to commit to. There’s the $1 million rebuild costs and $3.3 million for the home. Not many people have that. It’s a very small buyer pool.”

The current reception from the market is a marked contrast from how buyers received the property in 2014 when the Sydney housing boom was in its early stages.

Back then the home was in even worse condition — windows were broken, ceilings had collapsed and a wonky shack was out the back — but a mob of 150 people attended the auction and five parties registered to bid.

Other rundown homes that recently returned to market included 609 Bourke St in Surry Hills, a dishevelled terrace which was relisted in October with a price guide of $2 million after having sold in May for just over $2.17 million.

The vendor had decided to sell the four-bedroom home after giving up grand plans to revamp it and instead move into another house with “all the bells and whistles”, according to selling agent Nic Fren.

A partially renovated home at 20 Cook St in Randwick goes to auction today with a guide of $1.5 million to $1.6 million. Almost the entire second level is a mess of wood beams and construction materials and interest from buyers has “not been overwhelming”, said listing agent Martin Farah of NG Farah.

A rundown terrace at 148 Reservoir St, also in Surry Hills, goes to auction today with a guide of $1.52 million, with the headline of the listing urging “someone finish this terrace renovation”.

The bottom two levels remain in disrepair — the main bedroom’s balcony has no railing and the plastering is falling off the walls — but the attic level has been fixed up.

Rundown homes are often better purchases if there is no renovation potential at all, Stone Real Estate’s Daniel Baran said.

Mr Baran is selling a three-bedroom house in Rosebery that burnt down last year and said the interest has been considerable because the $1.3 million home can be knocked down.

“Sometimes it’s actually cheaper to just rebuild rather than trying to renovate what’s there but there are some homes you can’t knock down, which can make things more difficult,” Mr Baran said. – All News First!

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