First National Real Estate has reported increased interest in damaged or destroyed homes, particularly those in 'desirable' areas, as renovators and investors look for bargains in order to build strong capital gains.
A blog post on First National’s website said homes in disaster affected areas had also seen increased interest.
“Properties that have suffered the effects of flood damage, fire, storms or cyclones are now suddenly much more popular," the blog said.
“Despite a strong lift in confidence, relatively soft market conditions mean that more value needs to be added to properties by investors looking for fast capital gains.
“However, they’re not for the faint hearted or inexperienced – strong organisational and budgeting skills are critical.”
Investors should be warned that unexpected challenges can arise when renovating ‘disaster homes’ and costs can quickly blow the budget, the blog added.
David Servi, director at Spencer & Servi in Sydney’s Surry Hills, sells - amongst many other property types - terrace houses on the fringe of the city.
“The houses that we mainly come across that fall into this category are completely unrenovated, not so much damaged by flooding," he told Real Estate Business. “There’s usually only a handful of truly original terraces that come onto the market each year. It appeals to people who don’t want to pay for someone else’s renovation.
“If you renovate a kitchen so it’s all stainless steel or marble, it’s obviously not going to appeal to everybody. If there is no kitchen, everyone can see the kitchen in their own way. And their way is obviously the best way.”
“The inner city is filled with designers and architects and creative people, so they want the opportunity to paint their own canvas rather than paying for someone else’s.”
Jason Andrew, an indepedent auctioneer whose firm operates in south east Queensland, which includes some regions hit hard by major floods in January 2011, said he hasn't seen a particular push for 'flood damaged' properties.
"We've noticed considerably larger crowds, more buyer registrations and active bidding for properties that have some requirement for renovation, but not specifically related to flood areas," he told Real Estate Business. "The driver is people wanting to add their own style, as well as investors looking for capital gain."
First National Real Estate said it recommends investors have a builder and architect inspect any property they are considering before buying.
“This will assure a clearer understanding of the scope of works required, the likely budget that will be required, and, most importantly, how long the restoration or renovation process may take,” the blog post read.