Renovation boom slows as construction costs skyrocket
The renovation boom could be coming to an end as construction costs skyrocket and the property market softens.
The COVID-19 pandemic saw a rise in residents choosing to renovate their homes after lockdowns saw us trapped inside.
"At the moment we're seeing the volume of renovations at about 30 to 35 per cent pre-COVID levels, and for new home building it's almost 50 per cent above pre-COVID levels," Tim Reardon from Housing Industry Association said.
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Many Australians spent big on investing on renovations during the pandemic but now the boom is slowing. The Age/Getty
For Sydneysider Bianca Pratt and her family, renovating wasn't an option when they saw the quote for upgrading their Northmead home.
"I was like, 'oh my gosh, I'm going to look at $500,000 for it' and my husband Josh was like, 'not a chance are we spending $500,000 on this house'," she said.
Instead, they purchased a new home in Kings Langley which was equipped with everything they wanted.
"I'm grateful that we didn't make the choice to renovate, because we may not have been able to afford to finish the renovation," Pratt said.
Pratt and her family aren't alone as construction costs skyrocket across the country and turn many people away from renovating due to the price tag.
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The cost of construction materials has skyrocketed over the past 12 months. 9News
Corelogic reported construction costs increased 10 per cent in the past 12 months which is the highest rate of annual growth since the introduction of the GST.
Materials are seeing eye-watering price increases with steel jumping 42.1 per cent, timber up by 20.6 per cent and aluminium up by 16.2 per cent.
Not only are materials costing more but interest rates hikes are turning more people away from owning a fixer-upper due to mortgages also rising.
"Buyers are saying, we're not looking to do renovations, we're looking for the property to be fully completed and that is probably one of the biggest signs there has been a big shift out there in the market," James Kirkland from Upside Realty said.
"There's no doubt that higher interest rates are sapping confidence in the housing market, but it may present opportunities for savvy buyers going forward," chief economist at My Housing Market Andrew Wilson said.
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Rising interest rates have slowed the number of Aussies looking to buy a home. 9News
Adding to the woes of renovators alongside rising costs of materials and interest rates, the wet weather is causing extensive delays which only adds to the cost blow-outs.
Building costs are expected to stay high however they won't climb as quickly next year.
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