Renovations On The Rise
From minor maintenance to a major makeover, more and more Australians are getting bitten by the renovation bug.
Following a big slump last financial year, home renovation is bouncing back to be a $30 billion-plus contributor to the national economy, a Housing Industry Association report shows.
It predicts that money spent on renovations will top $28 billion for 2013/14 and hit $30.3 billion within three years.
While money spent on renovations dropped to decade lows last financial year, the HIA believes record low interest rates and rising consumer confidence will encourage more home makeovers.
Simple home upkeep accounts for the biggest share of renovation spending, with more than nine million homes across Australia all requiring regular maintenance.
The HIA says that kitchen and bathrooms are typically ripped out or updated every 15 years.
And it has become far more common to sacrifice a large yard for a bigger house on the same lot.
The fastest area of home growth over the past decade has been in multi-residential complexes more than four storeys high, according to the HIA.
As these modern homes age, they'll also need renovating, particularly their kitchen and bathrooms.
Baby boomers, those classified by the HIA as aged in their mid to late 60s, are using their superannuation payouts to renovate.
Much of their renovating is major, and many of them will live in their own, freshly made-over homes longer than earlier generations.
This could remove some of the burden from residential aged care.
At the other end of the spectrum are first home owners with tight budgets that might buy on the cheap and do up their homes bit by bit as their salaries grow.
In between the two age extremes, a DIY category, where handymen and handywomen buying homes to renovate and sell, has proliferated over the past 10 to 15 years.
They avoid capital gains tax by living in the house they are renovating while taking advantage of the healthy rises in house prices.
The renovation sector can also enjoy a fillip from tragedy.
After Cyclone Yasi in 2011 in Queensland's north, the value of approved home alterations and additions were around 10 times higher than the average for the area.
The report's author HIA economist Geordan Murray says the rising interest rates and dwindling consumer confidence that followed the GFC have all but gone.
"It is our expectations that interest rates are going to remain at the current low level for some time to come, so that will provide some catalyst for expenditure on renovations," Mr Murray said.
"And the indicators are consumer confidence will rise." AAP