9 January 2009

New Housing Down - Renovation Up in 2009 - ABS Reaction

With new home building approvals dropping 35% from a year ago the $20 billion a year renovation industry in Australia will become vital cog in maintaining employment in the building industry, Archicentre, the building advisory service of the Australian Institute of Architects said today.

Apart from new home buildings other buildings including units and apartments were down 21%.

Robert Caulfield

Archicentre Managing Director, Robert Caulfield said the major advantage of the renovation industry over the new housing market in kick starting the economy is that it can move far more quickly. "Renovation will be further fuelled by the historic low interest rates making cheap money available to fund renovations and increase returns in the long term. "People renovating already have a property and can start almost straight away and do not have to wait on development of infrastructure for a new estate which can take months or years. "The other advantage is that renovation projects are spread throughout the suburbs where new housing is based mainly in the fringe suburbs."

Mr Caulfield said the financial turmoil of 2009 will see more Australians stay put and spend more money on renovating their homes to improve their financial position by adding value to their major asset - the family home as a tax free investment.

"More than half of all Australians renovate at some point in their lives and Archicentre's Design Service cites a substantial rise in the past year in renovations.

"Home owners with tight budgets will move to turn the $50,000 to $60,000 of dead money spent on taxes, fees and charges to move into renovation investments where they gain in wealth and lifestyle with new kitchens, bathrooms, bedrooms, outdoor living areas or home theatre extensions."

Archicentre is the largest initiator of home renovations in Australia and cites the most common renovation request as a fourth bedroom with en suite and walk in wardrobe, family room and updated kitchen, costing around $150,000.

Mr. Caulfield said the dramatic drop in demand for new homes will provide a buyer's market for renovation projects as builders look for replacement jobs in a more competitive environment and could cut thousands of dollars off projects.

www.archicentre.com.au