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The latest HIA Renovations Roundup report predicts that home renovations will increasingly become an important part of the residential building industry.
HIA senior economist Shane Garrett says while 2016 was a strong year for new building starts, they are forecast to decline over the next three years.
He said it was against this backdrop that the building industry will become more dependent on work related to home renovations.
“Many are surprised to learn that renovations currently account for about one third of all residential building work,” Mr Garrett said.
“But by the end of the decade, renovations activity is likely to represent some 42 per cent of all residential building activity.”
Mr Garrett said detached house building reached high levels between 1985 and 1995, and this “stock” is ripe for renovation work.
“Added to the mix are remarkably low interest rates and the big home equity windfalls in Sydney and Melbourne – pretty ideal conditions for renovations demand,” he said.
Mr Garrett said the one key difficulty for the renovations market right now is the fact that turnover in the established house market is falling.
“This is an important driver of demand, and prospects for renovations growth would be even stronger if transactions on this side of the market started to increase again,” he said.
According to the March 2017 edition of the HIA Renovations Roundup report, renovations activity grew by 2.7 per cent in 2016 to $33.06 billion.
The pace of growth is projected to slow to just 0.3 per cent in 2017, before reaching 3.2 per cent in 2018. Further growth in 2019 (+2.4 per cent) and 2020 (+2.5 per cent) is expected to bring the value of home renovations activity in Australia to $35.94 billion.
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