Renovations on the rise in Australia
24 November 2014
- The Westpac Renovation Report reveals home renovations increased 147% since 2010
- Renovation spend is at highest level since early 2012, with New South Wales and Victoria leading the trend
- There has been a 40 per cent increase in value of residential renovations approved in the past year
- Almost nine in ten (89 per cent) Australians agree that renovation is a good strategy to increase the value of their property.
The number of Australian home-owners undertaking renovations on an annual basis has hit a four year, post-GFC high, according to new research released by Westpac.
Against the backdrop of rising house prices; residential alteration and addition projects have more than doubled - increasing by 147 per cent since August 2010, marking a stark turnaround from the downwards renovation trend that took place between 2002 and 2009.
The value of household renovations has also recently risen, with $600 million in approved residential renovations and conversions in August 2014, up 40 per cent from the recent low point in December last year.
The increase in the last 12 months has coincided with a further boost to house prices as low interest rates have worked their way through the economy and home-owners have opted to renovate rather than move.
The Westpac Renovation Report, compiled by RP Data and Sweeney Research, has listed the Sydney region of Mosman as the most renovated location (by value) in Australia.
Home owners in regional Australia are also embracing the renovation trend, with the Victorian Point Nepean region coming in second with more than $41 million in residential approvals over the past year.
“Favourable market conditions across Australia means that many home owners have seen the value of their properties rise. As a result, one quarter of Australians1 have been able to service additional borrowings to tap into this added value and extend or improve their home further and stay in their preferred location rather than moving to a bigger home elsewhere,” said Gai McGrath, Westpac General Manager of Retail Banking.
While the majority (64 per cent) of renovators still finance their home improvements through savings, more than one in four (26 per cent of those aged 18-54) are choosing to finance their renovations by increasing or topping up their home loan.
“Existing home owners who may once have looked to upgrade into a new home are choosing instead to renovate, adding desired rooms, features and cosmetic changes.
“This can be a smart investment strategy as it means avoiding the costs associated with upgrading to a new home, like moving services and stamp duty.
“If you are renovating, not only are you improving your current surroundings and tailoring your home to suit your needs, but it can also add value to your property if you come to sell in the future.”
Home owners who are looking to renovate can visit their local Westpac branch and speak with a Home Finance Manager on the best plan for their situation.
Notes to editor
Key findings from the Westpac Renovation Report:
- Since early 2010 the number of residential alteration and addition projects has more than doubled, increasing by 147% between the recent low point in 2010 through to August 2014
- Renovation spend is at its highest level since early 2012
- August 2014 saw $600 million worth of residential renovations and conversions approved, up 40% from the recent December 2013 low
- Almost 9 in 10 (89%) Australians agree that renovation is a good strategy to increase the value of your property
- Almost 1 in 5 (19%) Australians finance their renovation by increasing or topping up their current home loan.
- Within Australians aged 18-54, one quarter (26%) finance their renovation by increasing or topping up their home loan
- This is much higher for those aged 35 – 44, where 1 in 3 (34%) fund their renovation by increasing / topping up their current home loan
- Of homeowners who renovate to make extra room, more than a third choose to renovate instead of move as they do not want to pay stamp duty fees (36%) or do not want the inconvenience or cost of moving home (36%)
- 1 in 10 (10%) Australian property owners spent over $10,000 on renovations in the last 24 months
- 71% of consumers who renovate to make extra room do so as they want to stay in the same area
|SA2 Region||State||Value of residential approvals 12 months to August 2014|
|Coogee - Clovelly||NSW||$33,468,000|
|Malvern - Glen Iris||VIC||$31,692,000|
|Willoughby - Castle Cove - Northbridge||NSW||$29,259,000|
About The Westpac Renovation Report:
The Westpac Renovation Report was commissioned by Westpac and powered by Sweeney Research and RP Data.
Sweeney Research surveyed 700 Australians via the Research Now Online Panel, divided into renovators (own property, have spent more than $10,000 on renovations in the last 24 months) and intenders (own property and are intending to spend over $10,000 on renovations in the next 12 months). The survey was conducted between 10 September and 17 September 2014.
RP Data compiled Australian Bureau of Statistics dwelling approvals data from 2004- present, using projects where the value of work done was at least $10,000.
1 Source: Sweeney Research taken from The Westpac Renovation Report .