Renovations: Why The Slow Recovery?

The Spring 2015 edition of Renovations Roundup has been released today by the Housing Industry Association.

The detailed report is the most comprehensive review of Australia's renovations market, and provides coverage across each of the eight states and territories. This edition of Renovations Roundup analyses results of the exclusive HIA Renovations Survey for November 2015, in which there were almost 600 participants.

"Many in the renovations market are frustrated at the slow pace of the current recovery, following the slump in activity between 2011 and 2013," said HIA Senior Economist Shane Garrett.

"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," Mr Garrett said.

"There is considerable geographic variation however. Demand for renovations in NSW has been greatly boosted by the strength of prices. 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.

"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 is has substantially positive knock-on effects for employment," Mr 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."The Spring 2015 edition of Renovations Roundup projects that renovations activity will increase by 3.9 per cent this year with a slight 0.4 per cent increase forecast for 2016. HIA is forecasting that activity will grow by 0.6 per cent in 2017 followed by a 3.0 per cent increase in 2018, bringing the total volume of renovations activity to $30.62 billion.