According to Archicentre, the building advisory service of the Australian Institute of Architects, the Federal Government's move to cap superannuation contributions at $50,000 has stimulated interest in renovation and investment in negatively geared property.
In the latest Archicentre Consumer Sentiment Poll of over seven hundred respondents, approximatley 72% of respondents said they would be putting their extra funds into property. Approximately 40% said they would invest in renovation of their own home, while 32% said they would invest in a negatively geared property. Approximately 28% said they would use their extra funds by investing in shares.
Michael Cooper, Tasmanian State Manager of Archicentre said that with many Australians planning to top up their superannuation with equity in the family home or investment properties, the current rising house prices will have a significant impact on the lifestyles of hundreds of thousands of Australians.
The added bonus for people investing in the family home is that once completed and sold it is not subject to capital gains tax and they can enjoy the new renovations."
Mr Cooper said whilst this is a time of opportunity, people renovating their homes need to ensure they do their homework in relation to renovation and design to ensure they are in fact adding value.
"People purchasing an investment property can run into financial difficulty if they do not carry out a thorough inspection of the property", he warned.
"Last year, one out of three homes which underwent the independent pre-purchase inspection by Archicentre had faults which required attention allowing prospective buyers to factor in the costs of repair before making a bid.
"People who buy a 'lemon' are often confronted with unplanned borrowings to fix problems such as plumbing, wiring, rising damp and roof problems which can run to tens of thousands of dollars of extra funds cutting directly into the level of the superannuation returns."
According to Mr Cooper, the best defence against the loss of value in the family home as a superannuation asset is to get a professional, independent assessment of the property before purchasing and of any renovation before commencing.
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