Have a house in your portfolio built in the late 1980s? If so, you’re likely to be a part of a new renovation boom, according to a recent report.
Due to the housing boom in the late 1980s, the Housing Industry Association (HIA) has predicted a renovation boom, which is set to happen late over the next decade.
“The boom in house building in late 1980s is set to provide big opportunities,” said Shane Garrett, HIA senior economist.
The renovation revelation follows the release of the latest edition of the HIA Renovations Roundup Report, which observes Australia’s home renovations market, recent developments and forecasts.
The latest report, Mr Garrett said, revealed a “strong correlation” between the number of renovations and the current age of stock.
“The more houses between 30 and 35 years of age, the greater the need for renovations and improvements,” Mr Garrett said.
“The really good news is that the number of houses in the key renovations age group will increase substantially over the next decade – a result of record volumes of detached house building during the late 1980s.
“Houses belonging to the ‘1980s club’ will become increasingly ripe for renovations work over the coming years.”
The report also breaks down the status of renovations in each state and territory:
Renovations have been gaining speed, with renovation work growing by 5.7 per cent over the June quarter, 5 per cent higher than this time last year.
The stock of late 1980s property is also predicted to see modest rises, and renovations on such property have been forecast to rise 4.7 per cent in this year, followed by 0.3 per cent next year, then 3.9 per cent in 2019, and 3.1 per cent in 2020.
After a renovation downturn for two years, Victoria has been riding an upturn since late 2016, experiencing a growth of 1.4 per cent over the quarter, 12.6 per cent higher than this time last year.
The number of renovation-ready 1980s property is said to greatly increase over the next three years, with forecasts of renovation activity at a rise of 8.8 per cent this year, up 2.2 per cent in 2018, up 5.6 per cent in 2019 and then a decline of 1.2 per cent in 2020.
Despite an unfortunate outlook in 2016 and early 2017, Queensland’s renovation activity is up for the quarter at 3 per cent, but is still down 7.1 per cent for this time last year.
The amount of 1980s property predicted to be renovated is said to help sustain the amount of renovation work in the long run, as renovation activity has been forecast to decline 5.1 per cent in 2017, then slowly see a rise over the next few years with rises of 1.5 per cent, 4.2 per cent and 5.9 per cent predicted for 2018, 2019 and 2020 respectively.
A renovation downturn also hit South Australia, and is predicted to take longer to shake it off, with renovation activity for the quarter down 12.4 per cent, 10.5 per cent lower than this time last year.
A combination of fewer 1980s stock and the state’s current economic climate has HIA predicting renovation activity to decline 3.5 per cent this year, and again by 1.1 per cent in 2018, but is expected to bounce back with a rise of 5.9 per cent in 2019 and 4.1 per cent in 2020.
Unlike the other states and territories, Western Australia saw an upturn in 2015 and early 2016 on renovation activity, and then a downturn from then to now, with current levels falling 4.4 per cent over the quarter, which is down 16.8 per cent compared to this time last year.
The HIA is predicting the number of 1980s property will not be enough to sustain renovations by the end of this year, but will expand through to 2020, with renovation activity forecast to fall by 13.4 per cent this year, followed by another fall of 2.9 per cent next year, then rises of 6.6 per cent and 4.7 per cent in 2019 and 2020 respectively.
Tasmania currently is an unpopular state for renovations, riding out a downturn that started in the latter half of 2012. Current renovation work for the quarter is down 12.2 per cent, down 18.8 per cent compared to this time last year, which is said to be due to a lack of 1980s property ripe for renovating, but is expected to start seeing rises by 2019.
The current forecast sees renovation activity in Tasmania declining by 7.8 per cent this year, and then again by 3.5 per cent next year, ending a seven-year downturn with a rise of 9 per cent in 2019 and then again by 9.4 per cent in 2020.
Shrugging off the mining boom, renovation activity in the Northern Territory is currently riding a three-year upturn, with activity currently up 10.5 per cent over the quarter, 27.3 per cent higher than this time last year, due in no small part to detached housing from the 1980s.
However, this activity is reaching the peak of a cycle, with renovation activity going up by 6.2 per cent this year, then entering a downturn in the next few years, falling by 10.5 per cent next year, 5.8 per cent in 2019 and then 9.7 per cent in 2020.
The Australian Capital Territory started to see an upturn of renovation activity in 2015, but then declined, with current activity declining 3.5 per cent over the quarter, down 8.9 per cent compared to this time last year, with a diminishing stock of 1980s property largely being the culprit.
However, the medium term is expected to see an increase. The current downturn is expected to end this year, with a decrease in activity of 5.9 per cent this year, then a growth of 0.7 per cent next year. The growth is expected to continue in 2019 at 8.6 per cent and 6.6 per cent in 2020.