Renovations hit record levels as ‘cheap money’ floods the market

RENOVATION spending has hit record levels – just the start of what’s going to be a multi-billion surge, according to experts – and what’s driving it is being felt on every street in the country.

The surge is so strong that milliondollar renovation budgets are becoming par for the inner city, with latest six-month building approvals figures showing states like Queensland set to spend $2 billion a year on major residential upgrades within the next few years.

Australian Bureau of Statistics data showed Queensland councils had approved the highest number of alterations and additions to homes during the six months to the end of December. An astounding $926.78m in major residential renovations work was approved here, shattering the earlier half-year record set during the same period the previous year by more than $80m.

That spend was for major residential upgrades like making substantial changes that require approval from councils, such as adding major extensions to older houses. It does not include the funds being spent across the country by DIY renovators who may be painting, replacing kitchens, knocking down internal walls or the like.

Property industry analyst, REA Group chief economist Nerida Conisbee, said renovation activity could be expected to continue to break records in Queensland and Brisbane over the next few years.

“It doesn’t surprise me,” she said of the December surge.

“Firstly, we’ve had three interest rate cuts. Getting finance is a lot cheaper, so people are able to borrow more money. The second issue is around the fact that there are fewer listings, so even if people want to upgrade into a new home, a lot haven’t been able to find one, so it becomes attractive to renovate the one they’re in. Also, if you are looking for a bigger home, it may be better value to renovate your (current) home because of the cost of moving and selling.

“Also, confidence is high, people know if they pour money into their homes, they will get it back.”

Ms Conisbee expected fresh records to come off renovation activity.