Renovation of a new kitchen or installing a fancy bathroom tops the list of Canadians’ planned renovations, and they’re also likely to be the most profitable projects, according to a new report.
Canadians are expected to spend more than $45 billion on doing up their homes in 2011, up slightly from $44.6 billion in 2010, according to BMO Economics.
The vast majority of that money will be put to jobs inside the house, with 48% saying it will go to a new kitchen renovation and 46% planning to a bathroom renovation, the BMO poll found.
“If you’re undergoing a renovation in order to increase the value of your home, it’s important to understand that not all projects will deliver the same return on your investment,” said Katie Archdekin, head of mortgage products, BMO Bank of Montreal.
Bathroom and kitchen upgrades are the most profitable of home renovations, according to the Appraisal Institute of Canada. Property owners can recoup between 75% and 100% of the cost upon resale, compared with 50% to 100% for a paint job and just zero to 25% for additions such as a swimming pool.
Canada’s property market continues to march ahead despite warnings prices may have peaked and may even be set for a fall. The average house price rose 8.6% in May from the same month last year, according to a recent report by real estate giant Royal LePage.
The BMO poll also found that Canadians may be heeding official warnings on debt and not borrowing to upgrade their homes.
About 57% of poll respondents said they preferred to rely on savings to pay for their upgrades, compared with 19% who said they would take out a loan. Only 5% said they would use a credit card, which tends to be the most expensive form of borrowing.
Other popular home improvements include landscaping, with 39% of homeowners saying they planned changes to the outside of their homes. Thirty-eight percent planned to improve their basements, while 25% are turning their attention to the bedroom.
The least popular home renovation projects included installing a swimming pool and adding an extension, the poll found.
The survey was conducted by Leger Marketing using its online panel, LegerWeb, with a sample of 1,508 Canadian homeowners 25-45 years old.
Sharon Singleton, Ottawa Sun