Renovating vs relocating

Written by Douglas Ross in Renovating on January 5, 2017

Renovating vs relocating

So, what’s the story? Have your kids (finally!!) fled the coop? Are you at that stage where your bedroom is at risk of becoming a nursery or are there not enough good schools in your area? The decision between renovating and relocating is usually for those who need more space or need a different type of space. So for you downsizers why not read up on the opportunities of making that step. For those who aren’t sure whether to renovate or relocate, there are two main things that will make your decision for you. These are your budget and your personal circumstances.


Even if you are happy with your neighbourhood and what it can offer you both now and in the future, renovating may not be for you. There is a large amount of planning, change to your day-to-day lives and risk associated with renovating. But it can also be a great way to increase the value of your home while tailoring your space to suit your changing needs. Your personal circumstances will determine which direction is best. If you don’t see yourself in the same area in five years, renovating may not be worth the capital you invest in it as you may not see enough growth to make a profit out of the build. Even the average growth of your neighbourhood should impact your decision. Are property values in your local area likely to spike for any foreseeable reason?


Speaking generally, a typical renovation should cost you 5% of the cost price of your home. This allows for the capital growth of 10-15% due to these renovations. For a $500,000 home, this means a total cost of $25,000. Anyone who has renovated before will tell you that sticking to 5% can be very hard so always budget for the chance of this blowing out. Following a close look at your finances, such as the amount of debt you already owe and your savings, you can fund a renovation a number of ways:

  • With your own savings (or with a loan within your family).
  • Through a loan top-up.
  • Refinancing your home loan.
  • Through a construction loan.

The costs of renovating can often blow out due to unforeseen problems and a lack of planning. This means your next step should be to get your home valued by an agent. This will help you to get an idea of the potential of renovating on your capital growth. If it is still a go for renovating, then think about employing an architect. They can help reduce any unforeseen costs. By supplying blueprints that limit unforeseen changes to the plan, you can get the most out of your money. But maybe the scope of your project isn’t that large. In this case consider employing a draftsperson rather than an architect. They can develop plans for your build with an awareness of the requirements your council may impose.

Be aware of over capitalizing on your home. If the costs of your renovation blow out to where any capital growth cannot match how much money you have spent on the build, you risk losing money in the long term. Also be aware of pricing yourself out of your local market. If your build prices the value of your home far and above the norm for your local area, it may be hard to find buyers, which risks reducing your sale price, in turn losing you money.


When selling and relocating homes, timing is just (if not more) important as when renovating. Getting your home valued by a real estate agent is important because they can also give you great insights into your local area and what sort of market you are selling into. If it is a buyer’s market, you risk losing any capital growth you have accumulated over the years of owning the property.


  • Stamp Duty costs average at about $25,000 for a $550,000 home so can often be a large hurdle for those wanting to move to larger homes.
  • Agent fees average at approximately 2% of the sale price.
  • Marketing costs.
  • Solicitors fees.
  • Post-move costs (unforeseen repairs).

Both renovating and relocating can have quite similar associated costs. What may decide it for you are three things. Where do you see yourself in five to ten years? What financial position you are in now and are likely to be in the future? Can you put in the necessary time and emotional commitment required by either one?