Australians are scaling back their expectations for kitchen and bathrooms in new home purchases and home renovation projects, new data shows.

The Housing Industry Association has released the 2023/24 edition of its annual HIA Kitchens and Bathrooms Report.

The report provides an overview of current market conditions and future prospects for the nation’s kitchen and bathroom industry across each state and territory.

It is based on economic analysis as well as a survey of 120 participants from within the kitchen and bathroom construction sector.

Overall, the report revealed that:

• There has been a slowdown in activity relating to the kitchens and bathrooms industry as the boom in detached home building has subsided; and
• After a surge in expectations during recent years, Australians are scaling back on their level of ambition for kitchens and bathrooms in both new home building projects and existing home renovations.

On the first point, the report indicates that the kitchen and bathroom industry is experiencing a slowdown in activity.

After plummeting by 16.6 percent in 2022/23, the number of kitchens that were installed in new homes is expected to contract by a further 2.9 percent during the current financial year to come in at just 168,400.

This represents the lowest number of kitchen installations in new homes since 2012/13.

Meanwhile, the number of bathrooms that were installed in new homes plummeted by 35.4 percent from its record highs of 542,100 in 2021/22 to come in at roughly pre-pandemic levels of 350,100 in 2022/23. In the current financial year, bathroom installation numbers in new homes are expected to edge up to 367,800.

Turning to the existing home renovations, HIA does not provide specific data or forecasts for kitchen and bathroom work in this area.

Nevertheless, data which is included in the report suggest that conditions in this part of the market are more encouraging.

In broad terms, HIA says that levels of spending on existing home renovations remain well above pre-pandemic levels despite having come off recent highs.

Going forward, the Association expects renovation activity to continue to ease back but to remain well above levels that were seen prior to the pandemic.

Meanwhile, HIA’s estimate of ‘notional’ demand for kitchen and bathroom renovations is expected to continue to edge up.

This is based on the number of existing homes that are in the 10 to 20 year age range during which home renovation work most commonly occurs.

Beyond this, the report also reveals that Australians are scaling back their expectations with regard to kitchens and bathrooms as the lofty ambitions that were observed during the Commonwealth HomeBuilder period have subsided.

Over recent years, expectations for kitchens and bathrooms have soared.

Several factors contributed to this.

First, emergency-low interest rates boosted borrower capacity whilst generous incentives such as the Commonwealth HomeBuilder program put more money in household pockets to either build new homes or to undertake substantial home renovations.

Second, the COVID/working from home period saw housing demand shift toward larger spaces in detached houses in greenfield areas. Such a period also prompted a renewed focus on quality of space within homes.

In kitchens, for example, the value of built-in appliances in new homes surged as households channelled their inner home chefs and demanded more premium kitchen appliances.

Meanwhile, the average number of bathrooms that were installed in new homes surged from historic norms of around 2.0 to 2.6 – with almost six in ten new homes involving installation of three bathrooms or more.

Now, ambitions are scaling back.

In new housing, the report suggests that the average number of bathrooms being installed has dropped back to its pre-pandemic norms of 2.0 bathrooms per home.

Indeed, whilst more than half (57 percent) of new homes that were constructed in 2021/22 had three or more bathrooms, the survey revealed that 80 percent of new homes in 2022/23 had only two bathrooms installed whilst a further 10 percent contained only one bathroom.

In home renovations, meanwhile, the report revealed that almost eight in ten bathroom renovation jobs involved simply working within the existing bathroom footprint in 2022/23.

This contrasts with the previous year, where more than half of all such jobs involved expansion of the size of the existing bathroom footprint.

HIA Chief Economist Tim Reardon said consumers have been winding back their ambitions on the back of higher interest rates and rising construction costs.

“The size of a typical bathroom has fallen as home renovators and builders scale back their renovation ambitions,” Reardon said.

“Affordability and value have become stronger considerations for households looking to renovate or build a new kitchen or bathroom.

“This adjustment in consumer behaviour is evident in bathrooms more than kitchens. Each new home built in 2023 has on average two bathrooms, down from 2.6 per home in the previous year.

“The building and renovation boom in recent years saw kitchens increase in size, with more appliances and premium fittings. As homeowners spent more time at home, they also spent more money on their home renovation.

“Overall, the renovations market is cooling from the record peak of recent years but remains strong due to the low level of unemployment, house price growth and limited quality housing stock available to purchase.

“During the pandemic, the cost of a new kitchen or bathroom rose as households sought larger living and work from home spaces. The cost of a new kitchen and bathroom is continuing to rise, but this time it is due to higher construction costs.

“Renovation jobs have also been constrained, with a large majority of bathroom jobs involving the same or even smaller footprint. More than half of these jobs last year involved expanding bathroom spaces.

“In contrast, the majority of kitchen renovations in 2023 resulted in an increase in the footprint of the kitchen.”

Going forward, Reardon adds that the outlook for the kitchen and bathroom industry appears to be more promising.

“The cost of construction will stabilise this year as global supply chains are restored, and labour shortages ease,” he said.

“There is strong pent-up demand for housing amid record high population growth and a strong renovations segment. This bodes well for a solid volume of home renovations activity in the years ahead, albeit, below the level observed in recent years.

(eight in ten bathroom rennovation jobs throughout 20222/23 involved working within the existing bathroom footprint rather than expanding the bathroom)

Key Report Facts

According to the report:

• Out of those surveyed for the report who are involved in kitchen work, half (50 percent) reported that most of their work involved the installation of a kitchen in a new home whilst the other half reported that most of their work involved renovations in established homes. In relation to bathrooms, two thirds of respondents reported that most of their work concentrated around new bathroom installations in new homes.
• The average value of a kitchen that was installed in a new home in 2022/23 was $35,788. This is about one percent lower compared with 2021/22. The average value bathrooms that were installed in new homes increased by 5 percent in 2023 to come in at $23,128.
• Amongst survey respondents, two thirds (66 percent) indicated that the average age of a kitchen which they replace or modify is between 10 and 20 years. In bathrooms around 42 percent of respondents suggested that the most common age of bathrooms which they alter or replace was 16 to 20 years. This is followed by 11 to 15 years (27 percent of respondents).
• Of kitchen jobs which are performed in home renovations, almost two thirds (64 percent) involved a full kitchen replacement as part of a broader project. A further 36 percent involved a full kitchen replacement with no other concurrent renovations occurring in the house.
• Almost six in ten (59 percent) survey respondents indicated that their typical jobs involved enlarging the kitchen area and footprint. By contrast, almost eight in ten bathroom renovation jobs involved working within the footprint of the existing bathroom.
• The average dollar value of a kitchen renovation was $35,275 – a number which is comparable to that of 2022. That of a bathroom which was installed during an existing home renovation increased by 2 percent to come in at $27,198.
• More than half of the cost associated with kitchen renovation jobs involved costs for cabinetry including cupboards, doors, draws and shelving ($18,880). This is followed by built-in appliances (cook-tops, ovens, coffee machines etc.) ($7,231), bench tops ($6,995) labour ($5,881) and floor coverings ($2,594). In new bathrooms, the largest components by value were labour (6,177) followed by tiling ($4,743), plumbing fit-out ($2,296), vanity units ($2,304) and ‘other’ ($1,893).
• Compared with 2022, the average value of components which were associated with new bathroom completions decreased during 2023. The largest decrease was seen in flooring, plumbing fit-out and labour. By contrast, the largest increases related to wet seal and vanity units.

Enjoying Sourceable articles? Subscribe for Free and receive daily updates of all articles which are published on our site

Want to grow your sales, reach more new clients and expand your client base across Australia’s design and construction sector?

Advertise on Sourceable and have your business seen by the thousands of architects, engineers, builders/construction contractors, subcontractors/trade contractors, property developers and building industry suppliers who read our stories across the civil, commercial and residential construction sector