For homeowners holding off selling in the current climate of falling property values, it is time to maintain and increase their equity in preparation for the next market upturn.
But it takes careful planning to recoup renovation costs on sale, and overspending can quickly mire the unwary in more debt.
Latest Real Estate Institute data shows a 5.71 per cent drop on the August national median price of $350,000, and president Murray Cleland says "it looks as if economists are on the money with predictions of a 5 to 10 per cent decrease in the market, followed by a period of stability at the end of this year or early in 2009".
You can't rely on capital growth in this market, says interior decorator Jane Eyles-Bennett, of Hotspace Consultants, so you need to be proactive to make money from your property. "You need to renovate, but wisely."
She believes that most properties can be made over for $15,000 to $20,000, and a rule of thumb is to spend 5 per cent of the property's value on renovating.
"Five per cent is the maximum you should be spending in any market, because when you do it well, you can still reap some really good rewards," says Eyles-Bennett.
One of her clients purchased a property for $270,000, spent $15,000 on renovating - including a fridge, washing machine and dishwasher - and the property was valued one month later at $375,000. In addition, the rent increased by $135 week.
Eyles-Bennett bought a property for $283,000, spent $17,000 on it and the value increased to $350,000 - a $50,000 profit. She bought another for $310,000, spent $15,000 redecorating and sold it a month later for $375,000.
"This is a fantastic time to be renovating," says Christine Neil, of Property Profilers, "because for the first time in a long time, there are tradespeople available, and there are incredible deals on all sorts of products. When we were in the boom market, you couldn't get a builder for love nor money.
"Now they are touting for work for the first time in years.'.
The Reserve Bank's decision to cut the official cash rate last week will take some pressure off mortgage costs, and may encourage buyers to enter the spring market.
This is the time to renovate, she says, but those renovating for an instant sale need to plan carefully and not overcapitalise.
Before people decide what they're going to do, they need to know why they are doing it, Neil says. "If you do the wrong thing through failing to research, it can be so costly."
Neil encourages homeowners to plan to be ready when the market turns, with their home ready to go.
"Research the market your property is in and renovate to that market.
If you have a family home, do renovations that appeal to families and will have the widest attraction.
"If you're based in a family area, there's no point in making your home
suitable for a professional couple with lots of entertainment area because you effectively wipe out about 50 per cent of your market."
This is a great time to attend open homes and see what is commonplace and popular in your area, and then renovate to that level.
Neil advises prioritising moisture and ventilation control.
"That's the number one thing - before you do any painting, decorating and upgrading, you have to ensure your home is dry and healthy."
Budget to renovate consistently throughout the house.
Don't overspend in one area, such as the kitchen, and neglect the rest of the house, because it will make it look shabby, she says.
Things that can be done cheaply in the kitchen include painting, polishing or replacing stainless-steel benchtops, new flooring, tapware and handles, which can all make a difference.
New appliances are a good investment, says Neil.
"There are so many good deals around on appliances with people needing to shift their products, and that's a high-value item - they're very cost-effective for the return."
Other areas worth attention include tidying roofing, bathrooms and flooring.
With summer coming, creating an outdoor room will markedly increase the size of the entertainment areas in the home.
She says with the advent of outdoor heaters, there's been a 40 per cent increase during the past five years in people using their outdoor area as their primary entertainment area.
Landscaping gets a "huge" return per dollar, Neil says, and this is the time to be doing it.
"Kiwis love good outdoor areas, so I would be investing heavily in the exterior of my home."
Eyles-Bennett agrees the exterior is a place on which to spend money, but says this doesn't necessarily mean painting all the house if painting the trims, base and fence will tidy it up.
"Creating a first impression is so underestimated - people spend so much money on the interior of a house but forget to do the outside."
Cheap fixes include using bark and adding a new letterbox with nice numbers. Eyles-Bennett's top tips include not changing everything - but doing a good job with the things you do change.
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