Home renovations hit a post-GFC high

Home renovations hit a post-GFC high

Posted on Monday, November 24 2014 at 10:15 AM

The number of Australian homeowners undertaking renovations on a yearly basis has hit a four-year, post-GFC high, according to new research released by Westpac.

Against a
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 homeowners 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.

Homeowners in regional Australia are also embracing the
renovation trend, with the Victorian Point Nepean region coming in second,
having had more than $41 million in residential approvals over the past year.

“Favourable market conditions across Australia means that
many homeowners have seen the value of their properties rise,” Westpac general manager
of retail banking Gai McGrath says. “As a result, one quarter of Australians
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.”

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,” McGrath says.

“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’re 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.”

 

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