Reno halt: Surging costs spark rise of partially-finished Sydney home listings

HIA executive director – NSW, Brad Armitage, told REA that while some renovations may have originally seemed manageable, particularly before rates surged, they quickly turned sour as costs rose.

“In some cases, home owners began renovations during a period of very low interest rates and strong household savings, but have since faced a very different economic environment,” he said.

He said that a combination of rising mortgage repayments, higher living costs, and tighter lending conditions has placed pressure on household budgets, forcing owners to reassess their plans.

“When consumers become less confident about the economic outlook, large discretionary spending, such as major renovations, is often one of the first things to be reconsidered,” Armitage said.

He said for renovation projects, there were often unexpected costs that emerged once the work had begun, especially in older housing stock.

Adding to the already-high costs of renovations, tax settings can also heavily influence owner behaviour, with the government’s negative gearing reform making investors think twice about their assets.

While the trend is not yet widespread, Armitage said a combination of economic uncertainty and prolonged cost pressures could lead to more unfinished or half-completed homes coming to the market over the next 12–18 months.

However, Armitage noted that there was ultimately strong underlying demand for homes with renovation potential, with some buyers wanting to enter the market at a lower price point or conduct staged upgrades over time.

On the other hand, McGrath CEO John McGrath has predicted a rise in turnkey homes and new builds in the coming years as more first home buyers enter the market.

According to the NAB Residential Property Survey, in the June 2025 quarter, first home buyers’ market share of new housing increased to 40 per cent, up from 34.2 per cent in the March quarter.

He said while many developers offered turnkey or ready-built houses, there were also options for set layout designs with fixed colours and materials, infill or greenfield developments, or off-the-plan townhouses or apartments.

“These positives can negate the need for costly and worrying short-term renovations, at least,” he said.

Despite the benefits, McGrath said there were hidden disadvantages to new builds, including developer margins, unexpected construction costs and delays, and additional fees, such as land purchase costs.

“You will also need to find a reputable development company and builder,” he concluded.

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