A recent report by a housing industry body has predicted that home renovations will become an increasingly important part of the residential building industry over the next few years.
Housing Industry Association (HIA) senior economist Shane Garrett said that 2016 marked the strongest year since WWII for new home building starts in Australia.
However, he highlighted that HIA’s forecasts indicate that activity is set to decline on this front over the next three years, and thus the industry is likely to become more dependent on work related to home renovations activity.
“By the end of the decade, renovations activity is likely to represent some 42 per cent of all residential building activity,” he said.
“Detached house building in Australia reached very high levels between 1985 and 1995. This large stock of homes is becoming increasingly ripe for major renovations work,” he explained. “Added to the mix are remarkably low interest rates and the big home equity windfalls in Sydney and Melbourne – pretty ideal conditions for renovations demand.
“At the moment, the one key difficulty for the renovations market is the fact that turnover in the established house market is falling. This is an important driver of demand, and prospects for renovations growth would be even stronger if transactions on this side of the market started to increase again.”
According to the HIA Renovations Roundup report for March 2017, renovations activity grew by 2.7 per cent in 2016 to $33.06 billion.
The pace of growth is projected to slow to 0.3 per cent in 2017, before reaching 3.2 per cent in 2018, and further growth in 2019 (+2.4 per cent) and 2020 (+2.5 per cent) is expected to bring the value of the country’s home renovations activity to $35.94 billion.