With new home building approvals dropping 35 per cent from a year ago the $20 billion a year renovation industry in Australia will become vital cog in maintaining employment in the building industry, Archicentre, the building advisory service of the Australian Institute of Architects said.
Apart from new home buildings other buildings including units and apartments were down 21 per cent.
Archicentre managing director, Robert Caulfield said the major advantage of the renovation industry over the new housing market in kick starting the economy is that it can move far more quickly.
"Renovation will be further fuelled by the historic low interest rates making cheap money available to fund renovations and increase returns in the long term.
"People renovating already have a property and can start almost straight away and do not have to wait on development of infrastructure for a new estate which can take months or years.
He added that the other advantage is that renovation projects are spread throughout the suburbs where new housing is based mainly in the fringe suburbs.
Caulfield said the financial turmoil of 2009 will see more Australians stay put and spend more money on renovating their homes to improve their financial position by adding value to their major asset - the family home as a tax free investment.
Archicentre is the largest initiator of home renovations in Australia and cites the most common renovation request as a fourth bedroom with en suite and walk in wardrobe, family room and updated kitchen, costing around $150,000.
The dramatic drop in demand for new homes will provide a buyer's market for renovation projects as builders look for replacement jobs in a more competitive environment and could cut thousands of dollars off projects.
