The home renovation market should enjoy a modest recovery over the next few years, but that will follow another decline in 2015, the Housing Industry Association says.
New home building hit record levels in 2014 but the renovations market continued to struggle, HIA senior economist Shane Garrett said.
That continued a slump which has blighted the sector since 2011.
The volume of renovations activity has dropped 15 per cent over the past three years, Mr Garrett said.
HIA’s latest renovations report forecasts an 8.2 per cent lift in renovations activity between 2015 and 2018, due to continued low interest rates, a recovery in economic activity and an increased number of detached houses at prime renovations age.
But it expects a 2.8 per cent drop in 2015, with activity weighed down by a weak labour market, below trend economic growth and decelerating home price growth.
The renovations market – valued at $29.7 billion in 2014 – accounts for more than one third of all residential construction activity, compared to almost half in 2009/10.
“Big ticket expenditure items like home renovation jobs tend to suffer disproportionately at times when economic growth is slow and when unemployment is drifting upwards,” Mr Garrett said.
“The deceleration of wages growth to its lowest rate in almost two decades has also challenged the renovations sector.”
WHAT WE’RE SPENDING ON RENOVATIONS
- $29.66b in 2014, up 0.8 pct from 2013
- Forecast to fall 2.8 pct to $27.35b in 2015
- Forecast to rise 8.2 pct to $29.6b between 2015 and 2018