Should you move house or improve your existing home?
Increasing numbers of homeowners are choosing to improve not move, as the costs of moving often outweigh the benefits of adding size and value to their existing homes – but it depends where you live.
There is a stark North-South divide when it comes to reaping the financial benefits of home improvements, according to research by Nationwide.
Those living in areas where house prices are lower may find that their properties do not see the same level of gains in overall value as those areas where prices are higher and rising. In fact they may not fully recoup their investment when they come to sell up.
The huge gulf between house prices across different regions means that homeowners in the North of England, Scotland, Northern Ireland and Wales are spending a much larger proportion of their home’s value to achieve the same home improvement results than those in London and the South East.
Do the maths
If Londoners take out a typical further advance on their mortgage of just under £50,000 for home improvements, with the current average London house price currently at £456,000 this represents only 10.7% of the value.
By contrast, homeowners in the North take an average further mortgage advance of £22,600, but with the average house price of £123,900 this represents a much larger slice of the value at 18.3%. This extra relative cost was closely followed for those in Scotland (18.2%) and Northern Ireland (17.6%).
Room for improvement
A third (31%) of those surveyed considered the kitchen as the room where money was best spent, followed by the living room (22%).
Only one in 10 (11%) thought investing in a new bathroom added value, while 7% said that a bedroom was worthwhile. Six in 10 said they would prefer to stay put and either extend, make cosmetic changes or put up with their home as it is, as against a quarter (27%) who wanted to move to a larger property.
Nationwide’s house price data highlights that home improvements such as extensions, bedrooms and bathrooms add significant value to a property, with an extension or loft conversion increasing the value of the average home by £42,700, a new bedroom adding £22,100 and an extra bathroom £9,600.
Andrew Baddeley-Chappell, Nationwide’s head of policy for mortgages and savings, said: “Improving rather than moving for many may be the most effective way for people to cater for their changing needs at different stages of their lives. Instead of spending money on finding more space elsewhere, they can extend their existing mortgage borrowing in a cost-effective way to remain in the area they know and like.”