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Home renovations work will help to offset some of the weakening activity on the new home building front over the next few years, according to the latest edition of the HIA Renovations Roundup report.
Senior economist Shane Garrett said that after several years of post-GFC decline, home renovations activity has turned the corner and is expected to make a positive contribution to growth in residential building.
He anticipates that renovations activity will expand from $33.3 billion in 2016 to $35.1 billion in 2019, given that low interest rates are an “important support” for renovations demand.
“In the Melbourne and Sydney markets, the large increase in dwelling prices over recent years has helped persuade many households that performing a major renovation on their current home is a lot more attractive than moving house,” said Mr Garrett.
“In other markets, however, subdued wage trends and weak dwelling price growth will make it tougher to achieve growth on the renovations side.
“Interestingly, renovations activity is poised to benefit from the big expansion in the number of detached houses in the 30-40 year age group as we move into the 2020s decade. Homes of this vintage are generally crying out for renovations work – great news for those engaged in the industry.”
The report found that growth is estimated to have reached 3.3 per cent during 2016, following an uplift of 4.5 per cent in 2015.
A deceleration in 2017 is anticipated to result in renovations activity growing by just 0.6 per cent over the year. However, an expansion of 2.4 per cent is forecast for the renovations market in 2018, with a similar rate of growth projected for 2019.
From an estimated market size of $33.26 billion in 2016, the volume of renovations activity is anticipated to expand by a total of 5.5 per cent by 2019 to reach $35.07 billion.
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