The reno nation

Rising costs and a trades shortfall is not dampening Australians’ appetite for renovating, as they emerge from two years of lockdowns determined to create their dream home, new research shows.

New research from NAB reveals one in two Australians believe it is becoming harder to renovate a property, and six in ten say it’s become more expensive. Despite these challenges, one in three homeowners feel that now is a good time to renovate.

Dean Pearson, head of behavioural and industry economics at NAB, says that while lockdowns have inspired people to transform their homes, Covid-19 is also directly responsible for the rising costs.

“The Covid-19 pandemic has coincided with a surge in renovation activity as many Australians were confronted with significant lifestyle changes, including spending more time living and working at home,” Pearson says.

“Other factors, such as the HomeBuilder grant, rapidly rising house prices and people spending more time appreciating their local area and amenities, have also contributed to the growing desire and confidence to renovate.”

However, Covid-19 has impacted global supply chains, causing shortages of building materials, blowing out construction time frames and creating a trades shortfall. Labour analysis conducted by NAB in January revealed that tradespeople were among the most sought after workers in Australia, accounting for 35 per cent of the country’s overall labour shortage.

Against this unique backdrop, a sentiment survey conducted by NAB to understand Australians’ attitudes to home renovation found that around 14 per cent of Australians were renovating a property during the final quarter of 2021.

When asked if they believed it had become harder or easier to complete a renovation, 29 per cent of renovators said it had become harder, while 19 per cent said much harder. With ongoing demand for housing and builders passing on rising material costs, 61 per cent of Australians said it had become more expensive to renovate and 23 per cent signalled that it had become much more expensive.

The data showed that older Australians are more motivated to increase their home’s value, with 48 per cent of those aged over 65, 45 per cent of those aged 50 to 64, and 36 per cent of those aged 30 to 49 seeking to add value to their asset.

Confidence to reinvest in the family home, says Pearson, likely comes from the accumulated savings and increased equity Australians amassed throughout 2020 and 2021. Combined capital city dwelling values rose 22.2 per cent in the year to March, according to CoreLogic data, while the combined regions jumped 30.5 per cent.

“I was surprised at how overwhelmingly positive people were about renovation as a means to increase the value of their property”, he says.

“It just reinforces how important property is as an asset for people and how comfortable they feel about investing in that asset — and actually getting that money back.

“Obviously, there’s an expectation there will be a significant profit, over and above the renovation investment”, Pearson concludes.