The recent rise in interest rates has left many Australians wondering whether now the right time is to invest in a home renovation. In this article, we'll take a look at the current interest rate landscape, the state of the housing market, and whether renovating in the face of rising interest rates is a smart decision.
The Raising Rate
Since last May, the Reserve Bank of Australia has raised the cash rate 8 times from the historical low of 0%. The current cash rate is at 3.35%, and it's projected to peak soon at 3.85% to 4.1%, with another two to three hikes.
While some are worried about the return of the high cash rate era of the 80s and 90s; we need to be mindful of the changes in the macro environments. With early signs of inflationary pressure easing, the impact of these rate hikes on the economy and inflation would likely take one to two years to reach their maximum effect.
The Housing Market
The Australian housing market has been a hot topic lately, with prices declining after a COVID-induced boom due to rate hikes. While national home values would need to decline another 13% to reach pre-pandemic levels, signs of a bounce back are emerging, leaving many wondering if the bottom is near.
Meanwhile, renters faced a bleak market in 2022, which is predicted to worsen in 2023, underscores the underlying factors that contribute to the resilience of housing prices.
Should You Renovate?
Renovating your home is more than just a financial decision; it's a lifestyle choice that can transform your everyday living. BIBO offers a streamlined end-to-end solution that allows you to add a stylish extension to your backyard, whether a detached studio or a home extension, to tailor your home to your family's needs.
Adding an extra bedroom and bathroom for $100,000 is a no-brainer in many areas, as a house with an extra bedroom in the same location could demand a premium that is double, triple, or even quadruple that investment. Plus, you'll get to enjoy your updated home for longer! It's essential to consider the potential return on investment for home renovations. Checking out the value differences in houses in your suburb is a great starting point to see the possible return on investment for home renovations.
In conclusion, while rising interest rates and the state of the housing market can be concerning, renovating your home can still be a wise financial decision. With the suitable investment, you can enjoy a stylish home that better suits your family's needs and see a return on investment in the long run.
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New South Wales Median House Prices, Property Market Data & Suburb Profiles – Check here realestate.com.au