Australia’s home renovations sector is expected to expand by almost three billion dollars over the next three years and provide significant opportunity over the next decade as homes built during the boom times of the 1980s are updated and refurbished, a leading industry group says.
In its latest forecast, Housing Industry Association says it expects the value of the renovations sector to increase from an estimated $32.228 billion in 2016/17 to $35.120 billion in 2019/20.
HIA Senior Economist Shane Garrett said growth would be helped by the large number of homes built throughout the 1980s, which are approaching the 30-35 year mark at which remodelling and renovation are common.
“The really good news is that the number of houses in the key renovations age group will increase substantially over the next decade – a result of record volumes of detached house building during the late 1980s,” Garrett said.
“Houses belonging to the ‘1980s Club’ will become increasingly ripe for renovations work over the coming years.
“Our analysis shows a strong correlation between the volume of renovations work and the age of the housing stock. The more houses between 30 and 35 years of age, the greater the need for renovations and improvements.”
Along with the age of houses, Garrett says home remodelling activity will be facilitated by changes in how people view critical areas of their homes such as kitchens and bathrooms.
Whereas these were predominately functional places in the past, he says many home owners now want these places to reflect greater style and comfort.
Renovations activity is also being helped along by macroeconomic factors.
Rising house prices, for example, have increased the amount of equity which homeowners have against their own home (and thus their capacity to borrow in order to finance home remodelling) and are serving as encouragement for people to consider renovating rather than taking on the rising costs associated with a new home.
Nevertheless, increasing renovations activity is unlikely to offset the decline in new housing starts.
Over the three years to 2017/18, HIA expects the number of starts on new houses and apartments to drop from a record 231,880 to 176,670 – albeit with these levels still being healthy by historic standards.