‘Shrinkflation’ hits kitchen and bathrooms renovation market
The cost-of-living crisis and higher construction costs are leading to smaller kitchens and less bathrooms in new builds and renovations.
At the launch of the Housing Industry Association’s (HIA) Kitchens and Bathrooms Report, HIA chief economist, Tim Reardon, spoke about the “shrinkflation” that has befallen the kitchen and bathroom market.
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Reardon attributed this shrinkflation to the ongoing cost-of-living crisis as affordability and value have become stronger influences for households seeking to renovate or build a new kitchen or bathroom.
Reardon reported that this adjustment in consumer behaviour has been extremely evident in bathrooms, with each new home built in 2023 having on average two bathrooms, down from 2.6 per home in the previous year.
“The size of a typical bathroom has fallen as home renovators and builders scale back their renovation ambitions,” stated Reardon.
“Shrinkflation is evident across the economy as households bear the cost of higher mortgage repayments, and home renovations are no exception.”
Reardon explained that shrinkflation is also influenced by a myriad of other factors, most notably as a result of the pandemic-induced building and renovation boom in which home owners being forced to spend more time at home proportionally spent more money on home renovations.
This record peak of fevered activity within the renovations market has since cooled, according to Reardon, but the cost of a new kitchen and bathroom has only continued to rise due to higher construction costs.
“Renovation jobs have also been constrained, with a large majority of bathroom jobs involving the same or even smaller footprint,” he remarked, noting that in the year prior, more than half of these jobs involved expanding bathroom spaces.
The chief economist nonetheless stated that the future of the sector looks bright. He expects the cost of construction is expected to stabilise this year as global supply chains are restored and labour shortages ease.
“There is a strong pent-up demand for housing amid record high population growth and a strong renovations segment. This bodes well for a solid volume of home renovations activity in the years ahead, albeit, below the level observed in recent years,” concluded Reardon.
