According the HIA, the industry’s recent slump won’t be one that is quickly forgotten, as slow growth is forecast over the coming years.
“Many in the renovations market are frustrated at the slow pace of the current recovery, following the slump in activity between 2011 and 2013,” HIA senior economist Shane Garrett said.
“The hesitant pace of the current recovery is mainly due to patchy consumer sentiment and challenging labour market conditions in several states. Dwelling price growth is also pretty unspectacular in a number of important markets,” Garrett said.
What growth there is in the coming years won’t be evenly distributed either, and is likely to be concentrated in areas that have seen strong rates of capital growth.
“There is considerable geographic variation, however. Demand for renovations in NSW has been greatly boosted by the strength of prices,” Garrett said.
“Many Sydney households that had been planning on moving house find that it is now much more affordable to undertake a major renovations job instead.”
The HIA predicts renovation activity will pick up this year by 3.9%, followed by a slight 0.4% increase in 2016.
Activity will then grow by 0.6% in 2017 followed by a 3.0% increase in 2018, bringing the total volume of renovations activity to $30.62 billion; however, the HIA is somewhat concerned about recent interest rate rises.
“Australia’s home renovations market is a major strand of consumer spending and will be worth just under $30 billion this year. Its labour intensive nature means that it has substantially positive knock-on effects for employment,” Garrett said
“Over the coming years, the modest recovery will continue. This will be spurred on by very favourable interest rate settings as well as improvements in economic growth and the labour market over the medium term. However, the recent tightening of mortgage credit conditions casts an unwelcome shadow.”
