Rewind to a year ago and if a friend called you to tell you their ‘big news’ you’d expect it to be one of three things: a wedding, a baby or moving overseas. But now, with the third option firmly off the table for the foreseeable future, another life milestone has overtaken altogether: renovating the home.
Home alterations have become something of a rite of passage, with data showing that Australians are currently renovating like never before. These numbers had been steadily increasing over the past few years, but have spiked enormously in light of our current climate.
Australian Bureau of Statistics data showed that the value of home renovations approved each month passed the $1 billion mark for the first time in February this year, climbing to $1.14 billion in March. That’s compared to an average monthly value of $680 million in 2019. Overall, Australia splashed over $37.5 billion on home renovations last year, according to Housing Industry Association data (HIA).
By the end of 2021, we’re expected to top that by another 10%.
“This year is going to be another record renovation spend,” HIA chief economist Tim Reardon told Domain.
But, what exactly is driving what’s being called ‘Australia’s renovation frenzy?’ Here, we delve into why so many people nationwide are rolling up their sleeves to reno.
It goes without saying that COVID-19 – which started in January 2020 and continues to stretch well into 2021 – has been the biggest driving force behind the current surge of renovations. But what is it exactly about the pandemic that has Australia’s drawing up blueprints and getting out their toolkits?
Working from home
As of June 2021, two-thirds of the Australian workforce were working from home. Many of these people have not been back into the office since the first major outbreaks last year. For many, this has led to an increased urgency to improve their surroundings, for a better work environment.
“It’s a lot to do with COVID and people seeking more living spaces and working from home and, because of the pandemic, not being able to move home as much,” said Tim Reardon.
Buyers’ agent Rich Harvey echoes this sentiment. “COVID has meant we’ve been in our homes for longer, and we’ve been cramped up and don’t have a proper space to work in,” he told Domain. “So now we’ve decided to do something about it. We started out as a nation of people who wanted to own real estate. Now, we’re a nation of upgraders and improvers.”
For some, that may look like adding on an office. For others with a heftier budget, this could be an entire wellness centre for improved work/life balance.
“It is a combination of gyms, spas and saunas and steam rooms – you name it,” high-end architect Luigi Rosselli told the Sydney Morning Herald. “There’s quite a number popping up. They seem to have much more cash to spend than they had before, particularly in the finance sector.”
Australians spending more time at home naturally makes it easier to facilitate and supervise renovations, too. While previously, people may have had to work their reno arrangements around any travel plans, that’s no longer a factor to contend with.
Restrictions around home inspections and closed borders have also created additional barriers around moving or selling a home. As a result, homeowners have been more likely to stay put and make improvements to their existing property.
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Less incidental expenditure
Less opportunity to travel naturally means more cash in homeowner’s pockets to spend on renovations. Not only that, but with many cities going in and out of lockdown over the last few years, many are spending less on entertainment in general.
“We also haven’t had as much household expenditure on travel and restaurants and entertainment, so we’re spending that money instead on home renovations,” said Tim Reardon. “Then you add in the government’s HomeBuilder grant and low-interest rates and you can see why even our spending in hardware stores has gone up by more than 25 per cent.”
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Little improvements add up
More time at home also means homeowners have more time to look at what they’d like to improve in their property. While this may start with a decluttering session or some tiny tweaks, things can quickly snowball when people have more time on their hands.
“I think a lot of people took the opportunity during the various lockdowns to have a good, hard look at their homes, and then remove so much clutter from them,” Geoff Fitzpatrick, a spokesperson for the Design Institute of Australia, told Domain.
“Then, the moment you remove things, it can show up the deficits and deficiencies in other areas. And once you start … A friend replaced a washer on a dripping tap in his bathroom, broke a tile while he was doing it, then had to replace all the wall tiles and the floor tiles that matched. Before he knew it, he’d done the whole kitchen and was starting on the bedroom.”
Rich Harvey also shed some light on why the average renovation cost has ballooned from between $40,000 and $300,000.“I think everyone starts with a certain budget and plans to stick to that,” he told Domain. “But then virtually everyone blows the budget. You look for door handles but see some others that are really nice and a bit more expensive, and before you know it, the budget’s gone out of the window.”
Australia’s property market
As influential as it is, COVID-19 isn’t the only factor driving the renovation frenzy. Other conditions in Australia’s property sector have created the perfect environment for home improvements.
The HomeBuilder grant
The Australian government’s HomeBuilder grant has been a major galvanising force behind the construction. Each state has offered their own grant, which provides eligible owner-occupiers with funds to build a new home or substantially renovate an existing one.
By April 2020, over 22,110 Australians had applied for HomeBuilder, receiving between $15,000 or $25,000 grants to put towards work, depending on the value of their house. The HIA forecasts this will add up to $41.2 billion worth of work for 2020/2021. In some states, the HomeBuilder grant has been extended from between 6 to 18 months — but even once it finishes, the flurry of renovations aren’t expected to slow down anytime soon.
Australia’s rising property prices
While it’s up for debate whether it’s because of the pandemic or in spite of it, there’s no denying Australia’s property market has experienced substantial growth in the last year.
Sydney’s median house price hit a record of $1,309,195 in the first quarter of 2021, while Melbourne also crossed the one million dollar threshold for the first time. Even Brisbane, which is known for its fairly ‘middle of the road’ property market has seen record highs.
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It’s possible that some homeowners are capitalising on this growth, making improvements to increase their home value even more as they prepare to sell.
With a perfect storm of conditions, there’s no doubt the Australian renovation market is on a roll right now — and it shows no sign of slowing down.
Words by Emma Norris
If you’re thinking of refinancing your property for renovation, the brokers at eChoice are here to help! Contact us today and we’ll find you a competitive rate.