In the not-too-distant past, the well-worn journey for households began in what was popularly known as a starter home – code for small and affordable, but not a place to live for the longer term. After that, people moved on to progressively larger homes to meet the needs of growing families and lifestyle changes. In the prevailing market parlance, they became trader-uppers.
That model worked as long as homes were reasonably affordable and in relatively plentiful supply. Neither is the case for the majority of aspirant homebuyers today, whatever stage of the journey they are on.
Indeed, the rapid property price increases experienced during the Celtic Tiger years limited the options for many people. And for many, the solution was to work with what they had to meet their changing needs.
But the decision to renovate or extend an existing home is based on much more than financial considerations. Emotions have a big part to play as well.
“People can get very attached to their homes,” notes Brian Hefferon, managing director of self storage specialist provider Nesta Storage. “They like the area they are living in, the kids are in local schools, they are close to work and amenities, and there is very little out there if they are looking to move. They will probably decide to renovate, and there is a broad spectrum in that. It can be a little, such as putting in a new kitchen, or can involve full rewiring and replumbing of the home or adding on an extension.”
Here in Arklow, if people budget €100,000 to €150,000 for an extension or renovation, that would usually see them dip into negative equity
— Architect Emmet Duggan
And even if they do decide to move, they may still need to renovate, he explains. “Unless you move into a new build, the property you buy will probably need work done to it. People may want to move to be near schools or transport links or other amenities, and the home they are in might be cramped or the layout doesn’t work for their stage of life. But if their existing home ticks those boxes in terms of amenities and so on, a lot of people will look to enhance the property they have, particularly if they have lived in the home for a long time and brought up their kids there.”
One issue when renovating is what to do when the work is being carried out. “In our experience, people don’t want to stay in the home while it’s going on,” says Hefferon. “Nesta offers storage solutions for furniture and so on from as little as a week, and for as long as it takes.”
But there are financial challenges when it comes to buying a home that needs work done. “There was a time when a doer-upper made a lot of sense, but not so much now,” says architect Emmet Duggan. The equation no longer works in many cases due to the combined cost of the house and the subsequent building work. And that’s particularly the case for regional Ireland.
“We are based in Arklow, but 95 per cent of our work is in Dublin,” Duggan explains. “Down here in Arklow, if people budget €100,000 to €150,000 for an extension or renovation, that would usually see them dip into negative equity. You will get that money back in Dublin, but not here. And the banks unfortunately look at the end value of the home after the renovation has been carried out.”
That means homeowners need to have the cash to pay for the work as the banks won’t lend for it. A tall order indeed.
And even in Dublin, the costs are challenging. “More and more, we are trying to work within the existing envelope. Homes built in the ‘60s and ‘70s tend to have quite small bedrooms and tight spaces internally. It’s very difficult to get a modern layout. You tend to have to give up a bedroom to get an en suite and built-in wardrobes for the master bedroom. The cost of extending and breaking through walls doesn’t make sense because building costs have gone up so much. The maths doesn’t work.”
The good news is that builders and materials are more available now. I’m doing some work on my own home and I’ve had no delays due to a lack of availability of supplies
— Estate agent Mark Kelly
But the maths can work depending on the perspective of the homeowner, according to Derek Trenaman of Ceardean architects. “Often people can go through the numbers and then see the price and then say it’s going to cost more than the home is worth. But you need to look at it from a longer-term perspective. You can’t look at it over five to 10 years, you need to see it as a 20-year investment.”
That longer time horizon changes the equation, and people will get payback on their investment.
Trenaman points out that working with an architect can help to tilt the equation as well. “We work with clients to help them see the possibilities of what can be done with their homes. We will go through the different aspects with them. What they want to do with their home, the quality they are looking for and the budget they’ve got to work with. We’ll guide them on the compromises they may have to make to get something they are happy with.”
Other factors are moving in homeowners’ favour as well, says south-Dublin-based estate agent Mark Kelly. “The good news is that builders and materials are more available now. I’m doing some work on my own home and I’ve had no delays due to a lack of availability of supplies. The prices won’t drop, there’s no chance of that, but it can make sense to extend. Adding 30 square metres to a home will cost around €100,000 and that’s quite a substantial extension.”
On the other hand, house prices are softening, giving people more options if they are considering moving. “The market is going to drop relative to the prices being achieved early last year,” Kelly adds. “There’s no doubt about it.”
Indeed, price drops are being seen already. “In one case we sold a house for over €700,000 last year and saw a similar property in the same area sell for €660,000 recently. That’s a drop of more than 5 per cent. Prices are being squeezed. That’s good news for people moving. They are able to get better homes for their money.”
