With the economic outlook uncertain and the recovery from the recession stumbling along, first impressions might suggest that now is not be a great time to sink more money into your property, but before you dismiss your dream extension have you considered all of the factors involved?
House prices
Most economists believe that we have not reached the bottom of the fall in house prices. The realignment to match earnings and consumer confidence is not even across the country, but most analysts predict falls by around 8% by the middle of 2012 compared to 2010 prices. The anticipated continuing fall in prices is a clear indication that if you plan to be moving in the short term you would need to think carefully about any improvements.
Finance
For those lucky enough to be able to finance their building project from their savings, will know all too well that with the UK base interest rate still at 0.5% and inflation for the year to April hitting 4.5% there is little benefit in holding onto a dwindling amount of cash.
For home owners needing to borrow, the same low inflation rate stands them in good stead. It is now possible to get a 5 year fixed rate mortgages below 4% though this does come with a hefty £2,000 arrangement fee. With a more sensible arrangement fee of £199 you can obtain a mortgage 1.99% above the base rate fixed for the life of the loan, the caveat here is that the loan would usually be for a maximum 60% of the value of the property. Should you need to be borrowing high amounts against your property value, the best available is 90% of the value at 4.19% above the base rate for the duration of the loan with no arrangement for.
The builders quote
Gone are the days when a homeowner would seek four quotes for that new two storey extension only to discover that their new mortgage loan that was costing an arm and a leg to pay back, didn’t impress the local builders. We have all heard the story of how two builders wouldn’t bother turning up, the third never came back with a price, despite numerous phone calls and the fourth who was already busy put in a cheeky high quote and landed the job.
Anecdotal evidence from a number of reputable jobbing builders suggests that work for builders has slowed down and that jobs for them are more difficult to find. The good news for home owners seeking building work is that the reduction in work for builders has resulted in labour prices being adjusted down and more builders chasing fewer jobs. The customer is now in the driving seat when it comes to builder selection and is able to shop around for the best value for money.
The Sales
It would be impossible not to have missed the continuous ½ price sales at bathroom and kitchen stores across the country from stores selling the nice things that could go into your extension.
Your property and extension
If you are setting out to extend your property simply with the aim of making money in the short term , you are likely to come unstuck. If you made any profit in this way it is likely that any gain would simply be lost in the administration of moving through Stamp duty, survey fees, estate agents, solicitors etc. However if you take a longer term view on the work and see the extension as a way to achieve a different house for not a great deal of extra money, then you are likely to reap the benefits.
Creating an extension that will set your home above similar properties will always place you in a strong position for the future. Equally improving the properties curb appeal , or extending in such a way that your property appeals to people on higher incomes , will not only give a better resale value for the future but will provide a nicer home in the short term. Adding extra bedrooms will move a property up in value, as will providing the current most desirable property asset of a large open plan family room and kitchen.
The change from the builders market of only a few short years ago, to a customer driven market for building work financed through savings or a low interest mortgage means that your dream extension need not be so far away.