Upgrading your PPOR during a slump

[devo76]

Hi all. Recently i have been thinking about this and it seems to be a good idea if you buy into the same area. I have been thinking about 5 to 10 acres with a house or land and a shed and build a house later.Values in my area have come back across the board so the cost difference to jump from a 4 bed house in the burbs to a acreage has dropped a fair bit. My current house has probably come back say $40 to $50 grand since 2003 but acreages that where going for around $650,000 have dropped well over $100,000.Even close to $200,000 in some cases( Most likely overpaid). What are your thoughts. Are any other people thinking about upgrading while the house value brackets squeeze a bit closer.

Cheers

 

[devo76]

No reply. strange.Has any one out there taken advantage of lower prices to step up to a more expensive PPOR at a lower loan top up.

 

[Ausprop]

makes sense to me if you can afford it

 

[equitymate]

Upgrading in a down market makes sense. Just make sure you sell before you buy.
In previous down markets activity drops and there are less quality properties on the market.

 

[ralph wiggum]

I have been thinking of doing this, but with the lack of activity in my local area - even for very nice houses, I am worried that my house will not sell - or will take a very long time.

 

[MichaelW]

I have been thinking of doing this, but with the lack of activity in my local area - even for very nice houses, I am worried that my house will not sell - or will take a very long time.

That's OK, list it and wait. When it does sell you should be in a buyers market and able to buy well for your trade up.

Sounds like a good strategy to me.

What a lot of people do at this time in the cycle is "value add" to their existing PPOR through reno's and extensions. This is the hidden creator of value that is lost in those median year-on-year reports. A lot of money is spent which isn't captured in the original purchase price. We just added another room to our place and are doing a lot of landscaping at present. This all improves the value, but just gets lumped in the "capital growth" bucket when people compare medians in the future.

Cheers,
Michael

 

[Lukey13]

I'm very seriously considering doing this myself.

I too am a little reluctant to sell in the current market though.

Plan is to throw $20-$30K at renovating the current PPOR and then make a decision on whether to convert it to an IP and purchase a new PPOR, or sell and buy the new PPOR. The latter option will be more likely as we're looking at a new PPOR of about 50% more value than the current - so we don't want to push serviceability (by our standards not the banks).