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Sales of new homes have stalled in recent months as the adverse impact of the RBA’s rate increases continues to be felt.
Constraints on the supply of greenfield blocks have added significantly to costs for land, while meeting increased energy efficiency and accessibility stringencies in the National Construction Code 2022 is likely to put pressure on building costs.
Meanwhile, the renovations sector is set to hold up at elevated levels, more so than the detached new housing market. The pandemic-induced desire for space and amenity still remains. While unaffordability, tightening finances and land shortages continue, renovating rather than buying homes may appeal more to home buyers.
According to keyword search tools conducted by Compare the Market, Australia sits third in the world when it comes to interest in home renovations per capita, with bedrooms and laundries making it to the top of the hit list. Challenges experienced by the housing market may, in fact, be pushing renovations forward over new builds.
HIA Senior Economist Tom Devitt says the pandemic has changed households’ relationship with their home. ‘Australians are putting a higher value on their home environment, demanding more space and amenity,’ he says.
‘Research shows that renovations activity peaked in 2021, on the back of the surge in demand for home improvement during the pandemic. While further declines on the horizon are now expected, these should be relatively modest. There is still a strong demand for home improvements and the extreme weather events experienced in 2022 further supported activity.’
While the cost and availability of materials and labour will still be a concern, there are some enhanced opportunities to come. ‘The return of overseas workers and moderating of materials price increases will ease pressure in the second half of 2023,’ he says. ‘That’s good news for the renovations market.’
However, with enthusiasm comes some apprehension, according to Vanessa Walker, Editor of Houzz. ‘Undertaking a renovation project can seem daunting for homeowners, as it may be a big investment or a project they’ve been planning for a long time,’ she says. ‘Our research has highlighted that when planning a project, getting an estimate or proposal with enough detail, visualising the finished outcome and the lack of financial transparency in estimates they receive, have been challenges for homeowners.’
Vanessa’s advice to building professionals is to remember that for many homeowners this might be their first experience undertaking a project of scale. Builders should ensure as much transparency and easy documentation as possible. ‘This is the key to building a trusting relationship.’
When it comes to renovating, homeowners desire increased quality in materials and functionality. ‘Owner-occupiers were improving their home environment with the purchase of higher-end kitchen finishes and appliances,’ Tom says.
The HIA Kitchens & Bathrooms Report 2022/23 indicates that with Australians spending more time at home, there has been an increase in the average number of bathrooms in a home. This is up from 2.2 in 2019 to 2.6 in 2022. The renovation cycle also shows that homeowners are refreshing or fully upgrading their bathrooms sooner. These have changed from 17 years pre-pandemic to less than 14 years in 2022.
‘This may be a short-term trend that will unwind over the course of the decade,’ Tom explains. ‘Nonetheless, it has added to the large pool of renovation work currently underway.’
Homeowners are becoming more conscious of ensuring their renovations tick the sustainability box, according to Mike Hermon, HIA Executive Director of Planning and Development. ‘Without a doubt, sustainability is a growing focus for renovators,’ he says. ‘Builders who are proficient in this area can suggest design changes that can make a big impact over time.’
Being able to source sustainable or environmentally friendly materials is key, This requires patience and understanding, particularly when intending to use reused and recycled materials.
‘With a renovation, the builder and homeowner are not starting from a clean slate,’ Mike says. ‘That said, renovations are a great opportunity to modernise a home while bringing it up to standard. For example, walls and roofs may be able to be insulated where previously they may have been free of insulation or single-glazed windows can be upgraded to double glaze.’
For more data and information, including a drill down state by state, download the full HIA Kitchens & Bathrooms Report 2022/23.
And learn more about Houzz Pro, which provides research, content and enquire about joining its network of industry professionals.
Design community and industry software hub Houzz recently took to its membership to find out what renovations are on Australians’ hit list for 2023. The results outlined in the recently released State of the Industry report indicate homeowners look to improve their property in three main ways.
First published on 31 May 2023