There’s been a lot of talk lately about the cost of living coming down (the price of milk and petrol are two examples that come to mind). But, while house prices have been dropping, renovation and building costs, in general, look set to go up.

One reason for the price increase is that renovation projects now need to comply with five-star energy efficiency standards. Only new houses were subject to these standards when they were first brought in several years ago. Now, when designing a renovation, an architect needs to consider the existing building fabric as part of the whole house area. The whole house, or a large part of it, may need to be rebuilt and re-insulated, which can add thousands of extra dollars to the renovation costs.

If you buy a property and plan to renovate it, it is therefore crucial that you get the fundamentals right and buy well. You should look for older houses with better “bones”, rear orientation and building fabric to help control the renovation costs.

For example, it will be a lot easier and cheaper to achieve mandatory energy-efficiency standards in a house with a north-facing rear orientation, because natural light is much easier to capture and control.

In Victoria, this is very important for solar gain in winter; ie you don’t need to turn on the heater as much. As well as looking at the house’s rear orientation and building fabric, you should also consider the following: large room sizes, high ceiling heights and an elegant street presence.

Of course, another option to avoid the risk, hassle, stress and financial headache of renovating is to buy a house where all the hard work has been done. We have seen, in recent weeks, strong numbers through polished/new properties in established suburbs, such as 14 Staughton Rd and 6 Kardinia Rd, both in Glen Iris. Sure, everything may not be exactly to the buyer’s taste but simple changes could easily remedy this and not require additional building approvals. Both these houses had functional floor plans and suit modern living, with all the mod-cons and open-plan rear living areas.

It is not impossible to renovate but it will be harder and more expensive if you buy the wrong property. A cosmetic renovation, such as a new kitchen, is preferable to undertaking a major renovation that involves significant structural changes and additions.

Design smart.