05 August 2008 / by Daniela Gieseler
A growing number of property sellers are opting to put their plans on hold in the current market conditions, waiting for better times and taking out loans to renovate their property instead, a survey by Lloyds TSB Personal Loans has found.
Lloyds TSB surveyed 500 estate agents and more than 1,000 homeowners in order to find out how would-be sellers are reacting to the current crisis in the housing market.
The findings show that three in five homeowners (59 per cent) have decided to bide their time and half of those said they opted to renovate their current property in order to increase its value in the long-term.
Fifty five per cent of estate agents found that the number of homeowners taking their property off the market in favour of home improvements had increased; this trend is corroborated by figures from Lloyds TSB Home Loans which show a 19 per cent rise in applications for home improvement loans.
While 55 per cent admitted they were embarking on home improvements in order to boost chances of a sale, 23 per cent of renovation plans can be put down to changing lifestyle needs and making up for losses caused by the current fall in house prices.
New kitchens top the list of potential home improvement projects (79 per cent), followed by new bathrooms (59 per cent), extensions (49 per cent) and loft conversions (29 per cent).
David Wishart, director of Lloyds TSB Personal Loans, said: “For the last decade homeowners have been able to sit back and rely on rising property prices to increase the equity in their home but sadly this is no longer possible. If you want to trade up and avoid substantially increasing your mortgage, you’ll need to add value to the house you’re currently in.”
Whatever the motivation for a home improvement project, Mr Wishart said it was important to do the maths first: “It’s vital you consider the financial investment you’re about to make. A personal loan can provide a hassle free, affordable way of spreading the cost.”
In a comment on the research TV presenter and property finder, Phil Spencer, warned homeowners not to treat home improvement projects lightly: “In a buoyant market, people taking on a home improvement project could get away with less than perfect preparation or some slapdash sums, as their mistakes were covered by rising property prices. However, in today’s environment it is vital you plan any project thoroughly to ensure maximum return on investment.”
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