People are spending more than $60,000 on average renovating their home, according to annual lending data -- that’s a rise of more than 20 per cent in a year when lockdowns have people spending more time inside.
But the average renovation bill is still less than half what people would need to spend to qualify for the HomeBuilder scheme, offering some insight into the beneficiaries of the government’s $680 million stimulus program.
The average home renovation loans cost $63,188 across the nation, according to Suncorp Bank lending data for the financial year ending June 2020. It was a 23.5 per cent jump compared to the $51,169 spent on renovation loans a year earlier.
The money that would typically go towards holidays and events is being used on home renovations, Bruce Rush said, executive general manager of consumer lending at Suncorp.
“Many customers are keen to improve the look and feel of their home but don’t know where to start,” he said.
“The cost to renovate can vary slightly depending on the location you live in and subsequent cost of trades, as well as the quality of fixtures or materials used.”
Kitchen renovations cost $20,750 on average, bathrooms $16,250 and double carports $32,450, Suncorp said.
Another suburb overtakes New South Wales
The data painted a general story on how and where people have been spending their money on upgrades during the once in a century pandemic.
Victoria spent the most on renovation loans at $71,067, during a period that preceded the state’s second lockdown. New South Wales followed spending $66,609 renovating on average, while Queensland spent $60,560.
But among the most interesting shifts in patterns when compared to the previous year was the change in suburbs performing the most renovations. Generally, more renovations were being undertaken in suburban or regional towns.
Most renovations in NSW were undertaken to properties in northwest Sydney’s Kellyville, but regional towns Tamworth and Ballina were among the top five.
In Queensland, most renovations occurred in The Gap, but among its top five were Burleigh Waters, Elanora and Nerang -- regional towns several hours away by car from Brisbane.
Renovations in regional areas surge
The shift in renovations is consistent with the growing popularity of regional suburbs during the COVID-19 pandemic, where lockdowns and remote work arrangements have made living in the suburbs an attractive proposition for many.
The shift is one reason why regional areas have weathered the property downturn better than those in the city. Real estate values across regional areas edged down by 0.1 per cent between March and the end of July, according to CoreLogic, while properties in capital cities saw a sharper fall of 2 per cent in the same period.
“... In many examples, regional areas will offer some lifestyle advantages, either via the location’s proximity to the coastline or wide open spaces,” Tim Lawless said, head of research at CoreLogic.
“Population densities are generally lower (in regional areas), which is something that might be even more appealing as we move through this pandemic.”
Regional properties are also capturing the attention of investors. The number expressing an interest in living or investing in a regional property is on the rise.
Many priced out of the government grant
The government introduced a subsidy for renovations intended to keep the construction industry afloat during the worst of the COVID-19 pandemic, but the typical renovation loan issued by Suncorp falls well short of being eligible.
Renovators would have to spend from $150,000 to $750,000 to be eligible for a $25,000 grant under the government’s HomeBuilder scheme. That’s more than twice as much as the typical renovation loan written by Suncorp.
Other criteria constraining who could qualify for the HomeBuilder scheme include:
- Individuals must earn less than $125,000 per year, and couples less than $200,000 combined
- The building of a new home cannot be on land worth more than $750,000
- The value of a residential home being renovated can’t be more than $1.5m before construction
People interested in renovating can still apply for the government’s HomeBuilder scheme before 31 December 2020, but construction will have to start within three months of a contract being signed.