An environment of relatively stable house prices and a slower rate of household debt accumulation are showing up in a continued easing in major renovations' expenditure, according to a recent survey.
Commenting this week on the latest release of its quarterly Renovations Monitor, industry body HIA said that major renovation activity (jobs carried out by licensed builders and contractors) dropped by 13.7 per cent to $688 million in the December quarter of 2005.
HIA's Chief Economist, Harley Dale, said that the weaker result was heavily weighed down by a sharp fall in New South Wales.
"Outside of NSW spending on major renovations was softer, but not substantially so, at the end of 2005," Mr Dale said.
"This year will see a persistence of relatively stable house prices and lower growth in household debt. Hence major renovation expenditure will not match the levels seen during the boom, although it shouldn't fall significantly further either," he added.
"The allure and appeal of major renovation work has not all of a sudden lost its way. We are, however, in a period where households are not prepared to come to the party to quite the extent evident during the house price boom."
"New South Wales remains the exception to this general situation, with very weak economic conditions in Sydney likely to generate further under-performance of major renovations in 2006," he said.
Major renovation expenditure fell further in New South Wales and the ACT than elsewhere in the December quarter - down by 22 per cent.
"Sydney is acting as a major drag on the NSW economy and the weak update on major renovations is just one among a plethora of indicators pointing to NSW having slipped behind the pack," Mr Dale said.
Expenditure in the three months to December fell by 17 per cent in the Hunter Region and by 6 per cent in South Australia and Western Australia. Expenditure held steady in Victoria and increased by 2 per cent in Queensland and Tasmania.
The average dollars spent on major renovations declined in the quarter for all types of jobs except roofing and cladding, and repairs and maintenance.
A total of 8,433 households undertook major home renovations over the three months to December at an average value of $78,618 for each job. The most popular major renovation over the three months was a ground floor extension valued at $106,532 and around 63 square metres in size.
Footnote:
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