Despite a challenging 2020, and the volatile property market that’s come with it, property values are finally creeping upwards, increasing across much of Australia.
This marks great news for those planning to turn their home into an investment property, but organic increases in value are only one half of the story.
It may be possible to increase the value of your home beyond the base market rate by making a few smart investments that not only boost property values but also reduce average days on the market.
Here are five changes that could generate a significant return on investment:
1. Home Renovations
Home renovations are the obvious solution, with a new kitchen or new bathroom especially helping to increase the value of your property.
Renovations to the exterior of the property can also go a long way towards boosting ‘kerb appeal’.
Kerb appeal is the first impression that potential buyers get when they see your home from the outside.
The type of renovation that’s going to add the most value will really depend on the surrounding area, and what investors in this part of Australia are looking for.
For example, in heritage areas, restoring period features can increase values massively.
Investing in more space has never been more important for those looking to get the most for their property.
Following the COVID-19 outbreak, buyers are demanding more space at home than ever before, which means investors are actively looking for properties that offer this.
According to a global survey across 44 countries by real estate agency Knight Frank, 33% are more likely to want an annex following the pandemic to allow space for family members to stay, while 64% are more likely to want a home office or study.
And with many expecting to work from home for much longer - or even permanently - a home office that separates work and personal lives could be key to boosting value.
3. Outdoor Areas
Another major property change sparked by the pandemic is that buyers are actively looking for nicer, better equipped outdoor areas as they’re spending more leisure time at home.
This means that investors are looking for the same. Smart outdoor investments include outdoor kitchens, garden entertainments, and cozy seating areas. A swimming pool could be another smart investment, although they can sometimes be a little hit and miss.
While pools are an attractive feature in the summer months, they also require a great deal of maintenance, so it’s a good idea to check out other properties within your area to assess demand and determine whether an outdoor pool could be a good idea for your property.
4. Energy Efficient Improvements
An interesting study conducted by the European Commission found that investing in energy-efficient improvements for the home, such as thermal insulation for walls and floors, replacement of old windows, more natural lighting, renewable energy systems, better HVAC equipment, and smart temperature controls, could increase property values by as much as 3-8%, while rent could be raised by 3-5%.
This is backed by the Australian Government, who reports that sustainable upgrades ‘can increase and future proof property values’.
Investors are increasingly looking to purchase energy-efficient homes that can help to minimise everyday living costs for tenants while also working to protect the planet.
Never underestimate the power of foliage!
While it may seem strange to think that a few trees, bushes, or flowers could do much for the value of your home, the city of Casey in Victoria confirms that trees ‘increase property value’ in a number of ways.
While foliage can help to improve kerb appeal and make properties appear more homely and welcoming, they can also add significant comfort for those who live there.
Casey’s research suggests that the shade and irrigation created by foliage can reduce temperatures by 0.25 - 1.2 degrees celsius, helping to reduce the urban heat island effect in Australia.
Investors are becoming increasingly aware of this effect, actively looking for ways to boost comfort.
Securing a Good Return on Investment
Understanding what investments will generate results - and what investments won’t - can be tricky. But the truth is that anything that you can do to ensure your property better meets the demands of modern investors - and local tenants - can help you to get more for your home.
Even small investments can have a big impact on property prices, especially as the housing market continues to recover from uncertainty.
These 5 smart investments can raise the value of your home, leaving you with more to invest in another property, start, build, or further develop your portfolio, or find the ‘forever home’ of your dreams.