- Homeowners unwilling to sell at a loss in the current market are renovating instead.
- Some Kiwis are borrowing up to $600,000 to upgrade homes they already own.
- Even homeowners in Christchurch, one of New Zealand’s strongest housing markets, are staying put.
Homeowners are increasingly shelving plans to sell, opting to renovate rather than relocate and lock in losses that could run into tens or even hundreds of thousands of dollars.
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For others, the cost of moving and building new has become too hard to justify.
Builders, mortgage advisers and interior designers say more homeowners are choosing to improve what they have rather than start again somewhere else.
“A lot of people have said we thought we might sell, but the market being what it is we’ve decided it’s silly to sell because we paid $1.5 million for it and it’s now worth $1.3m so we’ll renovate the kitchen and live in it for another three or four years and wait for the market to recover,” Loan Market’s Karen Tatterson told OneRoof.
Mortgage adviser Michelle Isemonger said homeowners were borrowing big sums to upgrade existing homes.
“We’ve had quite a few in the last couple of weeks from $300,000 to even $600,000 of lending. They’re going, ‘OK, we’re happy where we are. Let’s just do the renovations, and then we’ll stay in it for another 10 years’.”
Loan advisers are seeing more customers wanting to borrow money for renovations. Photo / Getty Images
The shift comes as new figures from property insights firm Cotality found that around 13% of property resales in the three months to June got a price less than the owner originally paid, which is the worst reading since late 2012.
Interior designer Laura Heynike, of Pocketspace Interiors, said the shift began in Auckland when new RVs were issued 18 months ago.
“People have been really digging their heels in for the next five years until the expectation of what the vendor wants and what the buyer is prepared to pay for a house aligns,” she told OneRoof.
But it’s not just lower house prices keeping people in their homes. Homeowners in one of the country’s strongest housing markets are making the same decision – sometimes for a different reason.
Christchurch-based builder Lance Irving said a new home had become harder to budget for amid rising material and labour costs.
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“We had a couple in their 60s who were planning to build but have decided to stay in their current home and renovate it,” he said.
One Auckland builder said renovation work filled the gap left by a slowdown in new-home construction.
“If we had not had the renovation capability, we would have been under significant stress as a business,” Faulkner Construction managing director Ross McConnell said.
“2020 to 2023, we would have been 50/50 for new builds and renovations; now it’s almost 100% renovations.”
Pocketspace Interiors Laura Heynike says not everyone is renovating to avoid selling at a loss. Photo / Fiona Goodall
The trend is also backed up by the data.
ANZ said more than 6000 customers have taken up its low-interest renovation loan since launch. Kitchen makeovers were most popular, followed by bathroom upgrades.
Simplicity economist Shamubeel Eaqub said renovation work had lifted from recent lows, but was still below the Covid-era peak.
“You can see the turn in recent months in consents and hardware sales,” he said.
However, not everyone was renovating to avoid selling at a loss.
Heynike said some were making their homes work for the next stage of their lives.
“The kids have grown up and left home, and you can imagine the kids’ Weet-Bix stains from when they were five, and it’s still the same kitchen,” she said.
“It’s no longer the family home; it’s a couple’s home, so they are re-personalising it.
“They aren’t fixed to where they are now, but they also can’t stand how it currently is for the next five years.”
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