4 days ago
Staggering $54 billion spent on Aussie home renovations within the past year
Aussie homeowners are spending $5 billion more on renovations than they were before the pandemic, with a jaw-dropping $54b splashed over the past year.
Rising build costs and increasing home values have caused a spike in money spent across the state, with new research showing renovation loans have jumped by thousands since 2019.
But the Housing Industry Association (HIA) reveals this spending surge might not see another spike until worker supply meets demand.
HIA senior economist Thomas Devitt said 'massive increases in construction and finance costs' were playing out as the renovation market played catch-up with the changing economy after the pandemic.
'The resurgence in activity we've been seeing more recently will be much more reflective of increasing real activity,' he said.
'The cost of renovation projects seems to have stabilised around 40 per cent above pre-pandemic levels.'
The HIA predicted rising demand nationwide would cause Aussies to spend an extra $2b annually by March of 2029.
Mr Devitt said rising home prices meant renovations were seen as an affordable alternative to buying a new house, with the market was expected to continue growing.
However the extent of renovation growth would depend on the supply of skilled labour to meet the demand – especially bricklaying and ceramic tiling.
A separate HIA study that estimates potential demand for kitchen and bathroom renovations found homeowners were choosing to renovate their bathrooms first.
Across 2024-2025, Australia was estimated to have a renovation demand for around 244,000 bathrooms and 163,000 kitchens.
Mr Devitt said this demand was typically determined by the age of the residence.
'Actual demand for renovations may deviate from notional or potential demand, depending on short term variables beyond just the age of the dwelling stock, like housing market conditions, the economic outlook, or policy settings like interest rates and taxes,' Mr Devitt said.
Kirkwood and Co. interior designer Georgia Wallace said she found kitchens could keep pace with modern renovation desires more than bathrooms.
'I think if you're going to update a property or your own home, starting with a bathroom renovation is something that definitely lifts a property,' she said.
'It definitely dates faster, so it's something I think more people will be doing.'
But Ms Wallace said even a simple bathroom renovation could cost tens of thousands of dollars more than it used to, with more than double the pre-Covid wait times for builders.
'You could be waiting between six and 12 months to lock in builders,' she said.
'It's so hard to get a good tiler locked in.'
All up, 40,274 renovation loans were placed by Australians in the past 12 months from March, up by more than 3,000 from the previous 12 months.
Quarterly loan numbers in the 2019-2020 financial year were typically around 6-7,000, with 2025's numbers at an increase of about 2,000 per quarter.
Mr Devitt said while spending reached a high in 2021, he expected the renovation market to continue at a healthy rise moving forward.
'It may have cooled from the highs of recent years, but it's still going strong,' he said. 'It sustained itself much better than the new home building sector, and is set to pick up again too – from historical elevated levels of real activity, not just value.'
