Master Builders Australia (MBA) recently reported that home renovations in Australia had reached their highest level in 14 years, due to very low and stable interest rates and tighter credit conditions.
"The Australian home improvement sector had its most active quarter in 14 years in the three months to September 2018," said MBA chief economist Shane Garrett.
The upward trend in home renovations offset moderate GDP growth of 0.3% over the same period. The volume of renovations increased 4.5% in the single quarter and was 11% higher than in 2017.
Garret stated that recent data reflected a significantly improved market in the home improvement market relative to any period after mid-2004.
"While the construction of new homes has set new records in recent years, renovations have been very disconcerting and have failed to replicate this remarkable performance," he said.
The stronger results posted by the renovation market are due to very low but stable interest rates, reported MBA.
In addition, tighter credit conditions, which have been criticized for the difficulty of accessing property funds, paved the way for the recovery of the home renovation industry.
"The tightening of credit conditions has prevented many families from moving in the past year. It seems that some of them have decided to renovate their existing home, "said Garrett. "The Australian home renovation industry could be an unintentional beneficiary of tighter lending policies."
Garrett said the market was likely to follow even more. "In the longer term, we are almost certain to see further gains in home renovation. More single-family houses were built in the late 1980s in Australia than ever before or since. More and more of them will be begging for major renovations in the years to come, "he said.
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