Renovations, along with overall building activity, have struggled over the past five years but the consensus is that the tide is turning, albeit in changing patterns across Australian states.
The volume of activity in residential renovations fell in 2012/13 to $28.3 billion, which Housing Industry Association (HIA) researchers declared a low point for the sector. Activity is expected to expand about two per cent in 2013/14, with further increases to occur each year until 2017/18, bringing the value of renovations to $32.6 billion.
HIA economist Shane Garrett predicts stronger prices will speed the accumulation of home equity, “facilitating more home renovation loans”. The Australian Construction Industry Forum (ACIF), whose forecasts are informed by all major building industry member bodies, also believes conditions are ripe for greater investment in alterations and additions, as homeowners take advantage of historic low interest rates, while still acting cautiously in the wake of the global financial crisis.
As mid-2014 gears up to a widely reported apartment boom, the likes of BIS Shrapnel have commented on unprecedented levels of renovations in CBD skylines, where many office blocks are being converted to apartments.
There is also the restoration of heritage buildings into dwellings, while former industrial spaces on city fringes are being renovated into, or remediated and replaced by, new apartments.
Property Council office market research released earlier this year also references the fact that investors are targeting more buildings for refurbishment and conversion to residential use. This is encouraged in part by a rising trend in inner city living, including demand for smaller apartments.
Residentrial alterations and additions forecast
Figures represent large residential alterations and additions projects only (At least $10,000). Data courtesy of the Australian Construction Industry Forum (ACIF), which in May, 2014, released a new customised forecasts dashboard (acif.com.au).
Alterations and additions in non-residential buildings are not specifically measured by the Australian Bureau of Statistics, and hence are not represented above.
That being said, overall growth in refurbishment activity for those sectors in coming years is predicted, with each of the numerous categories of non-residential building types facing a different set of investment drivers.
In particular, ACIF forecasters have singled out retail investment to defy the gloom in that sector, with many retailers tipped to take the opportunity to refresh, renovate and expand their shops and service offering .The offices category is not expected to grow as rapidly as it has in the past, reflecting structural changes, however incentives for sustainability will drive continued growth in alterations and retrofits of current building stock.
ACIF briefings May 2014
Promising opportunities for new work for designers, contractors, and suppliers will be identified at ACIF Forecasts Briefings in May.
"Total construction activity is projected to amount to around $228 billion in 2014-15, slightly down on the 2013-14 estimate of $237 billion, said Peter Barda, Executive Director of ACIF. "Our Forecast Briefings will explain that there are winners and losers in those big numbers – by regions and work types."