High demand for home renovations continues – John McGrath

For the fifth year in a row, we’re seeing a strong appetite for home renovations, with property owners clearly prepared to wear the cost of shifting construction costs, including labour and materials.

NAB data released this month shows the demand for renovation loans rose 16% in the year to April 30. According to the Big Four lender, all major states across the country experienced renovation loan growth with Queensland leading the way at 25%. This was followed by Western Australia (17.9%) and then South Australia (15%), Victoria (10.8%), and New South Wales (10.7%).

Earlier this year, the global construction and property group, Rider Levett Bucknall (RLB), also highlighted that our construction activity remains at record high. And again, Western Australia, South Australia and Queensland enjoyed most of the country’s construction activity,

However these figures don’t take into account the May 12 Federal Budget’s fall out. But NAB did examine the impacts of our ongoing, rising fuel prices, and believes renovation costs could rise again, especially for building materials and transport. While we already know building and labour costs have dropped from their recent high points, labour costs alone have risen by up to 40% since 2019, depending on who you to speak to and what you read.

Renovations are certainly more expensive than they were in the pre-COVID years.

So, at this time, home owners should assess potential renovation issues with extra care, especially regarding finances. At the same time, such updates’ long-term popularity should offer some comfort.

Pre-renovation considerations

The practical tips and tricks NAB offers for home renovators right now are good, but they’re points that I advise every renovator to consider. Namely, include a larger-than-usual buffer in your budget – and expect to use it – and lock in your quotes, where possible. But it’s important to stick with easily obtainable construction materials, and ensure the most important materials are on site before starting a renovation project. Doing this will help to reduce potential delays and extra costs.

You should also think carefully about exactly why you want to renovate, including budget and time factors.

Offering a more attractive property to renters, or achieving a stronger sale, are the usual reasons for renovations. A targeted refurbishment – or, focussing only on specific, significant areas of your home, such as kitchens and living rooms – is the most cost-effective way to do achieve both possibilities

Alternatively, you might have a list of items that you’re happy to complete over time. For example, painting walls, installing curtains and blinds, or taking up your carpet and replacing it with timber or tiles.

Renovating your current home can be an easier, simpler way to enjoy an upgraded property, especially when compared to selling in a shifting, or slower, market.

Regardless of your reason for renovating, aim to begin with the essential changes, and only renovate or change what you can actually afford. Remember, too, that you may be able to make the updates yourself, rather than hiring a tradie.

But any tradie you do employ – and you’ll legally need them for electricity and plumbing works – should be licenced and certified. And, major structural works, such as property extensions, should be double-checked with your local council first.

As we head into another financial year, I expect renovation popularity to continue, almost regardless of what the future might hold. After all, even smaller, cosmetic updates can improve the overall aesthetics of your home, and with this, your enjoyment and satisfaction of it.