Housing market activity has surged in recent years as house prices shot up, spurred on by both sophisticated investors and novice developers trying to cash in on the boom.

Now the market has turned, the million-dollar question is — to move or improve?

House prices in Britain jumped three-fold since 1996 but are now falling at the fastest rate since the recession of early 1990s and sales have slumped.

At the same time, the credit crunch has seen lenders batten down the hatches on cheap and accessible home loans.

Against that background, many homeowners are sitting tight, in the hope that conditions will improve.

Others, however, are planning to move to take advantage of the falling property market — either trading up to a larger property at what they hope will be a bargain price or selling out to rent and wait for the market to bottom out before they buy in again.

Around 13 percent of homeowners — some 3.25 million people — are looking to move house over the next year, despite the housing market downturn, according to Alliance & Leicester.

But the trend for improving to increase value is also continuing, according to its poll of 2,035 adults: 19 percent of homeowners say they will make improvements to their home in the next 12 months to add value or increase saleability.

A further 50 percent of homeowners are making home improvements simply to better their living conditions and avoid the expense and upheaval of moving elsewhere.

Richard Taylor, head of mortgages at Alliance & Leicester, says: "Even within the current climate, there are still millions of people who are looking to move and they are doing all they can to get the best price for their property.

"However, it’s clear that DIY and home improvements remain important to all homeowners — both to those looking to add value to their house in order to sell, and to those who are looking to stay put and benefit from these improvements personally."

The most popular way for homeowners to add value to their homes is to re-decorate (69 percent), closely followed by improving outdoor space (59 percent) and carrying out routine maintenance (44 percent).

Homeowners are less willing to make more substantial improvements, with only 16 percent planning to add an extension and 11 percent planning to make their home more eco-friendly.

Large-scale improvements can, however, add the most value: the top three home improvements could add 54,922 pounds to the value of the average home, according to a survey of 110 estate agents.

The analysis, by GE Money, found that adding extra square footage continues to be the best way to increase value.

A loft conversion tops the league, adding an average 12 percent to the typical property (an average 22,898 pounds).

That was followed by building an extension, which could increase value by 10.8 percent, or 19,800 pounds, and adding a conservatory, which could add 6.7 percent or 12,229 pounds.

"The current housing market means that more people are looking to improve their home rather than move," says Gerry Bell, head of mortgage marketing at GE Money.

"However, before embarking on any improvements, it pays to know which ones will add the most value to your property.

"Region, type of property and location are all factors which will determine which improvement is best for a particular property, with the creation of extra living space continuing to be the best value improvement."

At the lower end of the scale, a new kitchen was found to add an average 4.6 percent and central heading 3.4 percent, while new windows or a new bathroom could boost a property’s value by 2.9 percent.

SOURCE:Reuters

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