Renovation activity slump set to continue next year
Low wage growth and sluggish home sales saw renovations slow over the year.
The Housing Industry Association’s (HIA) Renovations Roundup report found home renovation work contracted by 3.1% in 2017. HIA senior economist Shane Garrett said a similar contraction was expected in 2018.
“The near term outlook for home renovations demand is being held back by sluggish wages growth. Because renovations activity is often initiated by the new owners of older homes, the dip in established house turnover over the past 12 months has not accelerated renovations activity this year,” Garrett said.
However, Garrett said renovations activity was set to recover in the medium term.
“Interest rates are set to remain lower for longer than previously expected. The ageing of Australia’s dwelling stock will also work in favour of renovations demand – the number of houses in the key renovations age bracket of 30-35 years is going to rise substantially until the early part of the 2020s decade,” he said.
The HIA predicted a 3.2% rise in renovations activity in 2019 following a decline next year, leading to a 5.7% rise in 2020.