We’re doing home work

Green improvements are now a sizeable chunk of home renovations, writes

HOMEOWNERS are spending close to $9 billion a year on renovations, and a growing chunk of that money is going into green improvements.

The latest Australian Bureau of Statistics data shows that renovators spent $8.8 billion last year, up 44 per cent in a decade, as rising property transaction costs prompt more people to stay put.

A separate analysis of thousands of loans by peer to peer lender RateSetter has found that green borrowers are spending an average $13,230 on energy efficient home improvements, and account for almost one in five home improvement loans.

“We are finding people are becoming more environmentally conscious and we are in a time of the year when energy bills are ramping up,” RateSetter CEO Daniel Foggo said.

“We have seen a large increase in the amount of homeowners borrowing to improve the energy efficiency of their home.”

The research found that borrowers spent an average $16,794 on renovations and the most popular jobs were painting and decorating (35 per cent), outdoor upgrades (20 per cent) and energy efficient upgrades (18 per cent). Kitchens and bathrooms were next, followed by swimming pools.

Financing a renovation can be tricky, and Mr Foggo said it was unwise to try to lump the spending on credit cards unless people could repay the debt within the card’s interestfree period.

“Renovations average almost $17,000 – they’re not the sort of amounts people pay off in one month,” he said.

People’s Choice Credit Union spokesman Stuart Symons said the first step in a renovation project was to sort the finances, with personal loans and increasing an existing mortgage two common options.

Budgeting was vital, and every dollar spent should be tracked, Mr Symons said.

“It’s a pretty good rule of thumb to work out what you expect to spend, and then add at least 20 per cent on top of that for unexpected costs,” he said.

Renovators could potentially save money by doing some jobs themselves.

“It’s best to leave the structural stuff, plumbing and electrical to the professionals, but painting, non-structural demolition and flatpack construction are good places to start trying your hand at DIY — the elbow grease can really pay off,” Mr Symons said.

He said reusing and recycling some materials was another potential way to lower renovation costs.

Mr Foggo said renovators should avoid overcapitalising, “particularly when you are investing in a home improvement before trying to sell it”.

Personal loans could potentially be cheaper than adding debt to an existing mortgage, because the shorter time frame and higher repayments with a personal loan meant less interest was paid over the life of the loan, he said.

“Negotiate deposits or part payment upfront for suppliers. This will ensure you’re not paying interest on the full amount until the job is complete.”