As the boom in new residential building subsides, home renovations is set to emerge as a new area of focus for the kitchen and bathroom industry in Australia, a new report says.

In the 2017 edition of its Kitchen and Bathrooms report, the Housing Industry Association (HIA) says the number of kitchen and bathroom installations in new houses and apartments is expected to drop from record levels of 231,800 and 441,200 in 2015/16 to 173,200 and 338,900 respectively by 2018/19 as new home building activity drops back.

However, this is likely to be at least partially offset by stronger activity in home renovations, which the HIA says will grow steadily over the next four years.

HIA economist Shane Garrett says the renovations side of the market is likely to be helped by a number of factors.

In addition to the increase in household borrowing capacity to borrow brought about by low interest rates and greater levels of equity brought about by dwelling price rises, he says many of the homes built throughout the 1980s and 90s when kitchens and bathrooms were viewed predominantly as functional areas are now ripe to be upgraded to reflect modern desires for greater comfort and style.

In addition, he said many of the renovations which were put off during a period of low renovations activity a couple of years back may now go ahead in coming years.

“We have a situation where interest rates are extremely low and are likely to remain so over the short term at the very least and there has been a large price uplift in Sydney and Melbourne which is setting up the whole equity tank for many households in these cities,” Garrett said.

“As well, we have a process of aging going on within the housing stock. One of the biggest ever decades for new home building occurred in the decade between 1985 and 1995. A lot of those homes, if they haven’t been renovated already are going to become ripe for renovation over the next five to seven years. We think that will be a very big supporter of renovation activity over that period of time.

“Back in the day, kitchens and bathrooms formed a functional part of the house. People now expect their kitchen and bathroom now to have more style and comfort which wasn’t sort after when these homes were built 25 or 30 years ago.

“There is a big volume of homes that fall into that category. Some of them have been renovated already but more of them haven’t. It is likely that these homes will see a lot of action and attention in coming years.”

Whilst the HIA does not make specific forecasts for kitchen and bathroom renovation jobs, it says the ‘notional’ demand based upon the age profile of housing stock indicates a modest rise in the number of renovation jobs from just over 144,000 in 2015/16 to around 148,000 jobs in 2017/18 in the case of kitchens and from less than 218,000 in 2015/16 to more than 222,000 in 2018/19 in the case of bathrooms.

Outside of activity, the report also showed that the kitchen and bathroom industry is facing a shortage of skilled tradespeople.

Whilst there is a modest surplus of electricians, the report indicates that there are considerable shortages of carpenters, plumbers and joiners.