Renovations set to take up the mantle: HIA's Shane Garrett
GUEST OBSERVER
The Housing Industry Association has released the latest edition of Renovations Roundup, the only regular review of Australia’s $30 billion home renovations market.
Australia’s home renovations market is very much in recovery mode with 2015 marking the second consecutive year of growth. This followed a pretty nasty slump during the early years of the decade.
The recovery in renovations activity is being supported by the environment of remarkably low interest rates and very strong dwelling price growth in key markets.
In this context, many homeowners have decided to shelve plans to move house and instead conduct major renovations work on their existing homes. The large pool of available home equity has made this possible.
However, the pace is growth is being held back by the weakness of earnings growth in the economy and the fragile condition of consumer sentiment.
The importance of home renovations activity is often underestimated – it accounted for about 35 per cent of total residential construction during 2015. With new home building set to decline over the coming years, the expansion of the renovations market means that its importance will only increase.
The revival in renovations activity will provide a welcome offset to the more challenging situation emerging on the new home building side of the industry.
The Renovations Roundup projects that renovations activity will increase by 2.5 percent this year with growth of 1.7 percent forecast for 2017. HIA projects that activity will grow by 2.8 percent in 2018 followed by a 2.0 percent increase in 2019, bringing the total volume of renovations activity to $33.30 billion.
Shane Garrett is senior economist for HIA and can be contacted here.
