Victorian home renovations: Owners paying near-record sums to overhaul their properties

2 weeks ago 11

Victorians have spend more than $3.9bn on permitted home renovation works in the past financial year.

Victorians are spending near-record amounts renovating their homes, with a growing number embracing energy efficient overhauls to fight soaring bills.

But industry insiders fear cash-strapped owners are turning to unregistered, uninsured tradies and handymen, or even risking major updates as do-it-yourself projects.

Housing Industry Association analysis of Australian Bureau of Statistics data in the past financial year shows the state has stumped up more than $3.902bn for works with permits, just short of the $3.908bn record set in 2022.

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But the industry group has estimated notional demand for home updates should be closer to $12bn, based on historic data showing most residences receive a major update every 20 years.

The gap has been growing since the start of the pandemic, and additional HIA estimates show that despite near-record spending, the number of renovations in Victoria has declined from 12,125 in the 2022 financial year to just 10,500 in the past financial year.

Victorian executive director Keith Ryan said while smaller renovations didn’t trigger the need for permits, there was also often unreported renovation work performed by unregistered or uninsured tradespeople.

“And that’s very hard to track,” Mr Ryan said.

Official figures show neighbourhoods along the Portsea clifftop, as well as in Toorak and Brighton boasted the highest spend from owners looking to give their property an update in the past financial year.

Mr Ryan noted it showed work was continuing unimpeded in the areas where well-heeled homeowners had shrugged off interest rate hikes and the cost of living crisis.

But Williamstown in the city’s west as well as a stretch of the Surf Coast from Anglesea to Lorne also made the top 10 areas in the state with the biggest budgets for a reno, hinting that there were others looking to renovations as a way to save money long term.

Spending on home renovations around the state is at near record levels.

Sustainable Homes director Simon Clark said his agency had seen a spike in demand, especially from owners of heritage homes, in the past six months.

“And we are definitely seeing people using the terms ‘future proofing’ and ‘getting off gas’ more,” Mr Clark said.

“We used to get the very diligent bill watcher before the pandemic. But now it’s everyone.”

With most of their inner-suburbs clients’ renovations costing $600,000 or more, he said people appeared to now value their time at home more than they did before lockdowns.

In addition to the rise in material costs, those extending a home could be forced to overhaul their entire residence to meet new seven-star energy efficiency standards under the Nationwide House Energy Rating Scheme — if they add 50 per cent or more to the original home size.

Mr Clark said the difference between a 49 per cent extension and a 50 per cent expansion could add much as $50,000 to double glaze and insulate existing parts of their home – enough to stop some proceeding.

23/12/2008 TRAVEL: Aerial view of Sorrento and Portsea

Portsea is one of the top areas for home renovation spend in the past financial year.

“People are maximising their efforts to get a renovation paid for, but if people trigger this it’s a real problem as it can add $50,000 to a job as you have to upgrade so many other parts of the home,” he said.

“That would be stopping some people going ahead.”

More concerningly, he added that he was hearing around the industry of owners bringing in underqualified renovators or trying to do things themselves “out of desperation”.

He warned trying to get better energy efficiency on the cheap risked mould and water damage if the wrong kinds of insulation were used and vapour permeable membranes were not.

Mr Clark said the most-popular ways to slash builds during a reno or extension included

*expanding walls by a few centimetres to allow for wall insulation

*installing underfloor insulation or screeding a protective layer on top of slabs,

*replacing original windows with double glazing and installing energy efficient heating *ventilation and airconditioning systems to improve air quality and thermal control.

290 and 292 Fitzroy St, Fitzroy (BEFORE/DURING) - for herald sun real estate

BEFORE: 290 and 292 Fitzroy St, Fitzroy were recently under construction.

292 Fitzroy St, Fitzroy - for herald sun real estate

AFTER: What 292 Fitzroy St, Fitzroy looks like now.

But HIA figures show the big costs for home renovations and extensions are still kitchens and bathrooms.

Their latest surveys found the typical kitchen renovation in Victoria now costs $33,600, up from $25,500 in 2020.

Bathrooms have gone from $23,667 to $27,714 in the same timeframe.

New data from tradie marketplace Hipages reveals the platform has recorded a 10.4 per cent increase in job requests from homeowners in the past year.

There has also been a 24 per cent jump in Ikea kitchen installations, and a 6 per cent increase in extension and addition jobs.

Hipages vice president of marketing Nick Ellery said the figures showed an increase in optimism among homeowners.

“Homeowners who might have been putting off some projects … for quite a long period of time … we are seeing now that they’re more likely to do those jobs,” Mr Ellery said.

HIA senior economist Tom Devitt said the number of renovations in Victoria were forecast to pick up from 2026, likely after an interest-rate cut.