There are many reasons why building construction and renovations are in unprecedented demand. HomeBuilder spurred a premier demand and Sydney house prices rose by 26% over the year to August 2021.
This effect was felt in regional NSW also with comparable gains. The average value of each home renovations project stands at $163,445. Projects contracted between $150,000 to $750,000 had an average approval landing at $304,800 in the three months to July 2021. The collective value of home renovations approval was $981.5 million during this same three months period.
The boosted gain in home renovation total value is up 44.4% higher than the previous year. (Source: Master Builders Australia, September 2021)
It is generally perceived that as unrenovated properties change hands to new owners, a trigger-point is produced typically for new renovations works creating waves of new enquiries to builders and renovation specialists. This activity is expected to continue for the next few years.
Many freestanding houses were built in the 1980’s and there is a catchup on modernising these homes.
HIA’s chief economist Tim Reardon reported Oct 27, 2021 that “The cost of residential land has risen more than twice as fast as the cost of building materials over the past year.”
The HIA also reports that as land supply has been fixed for the last two decades, the surge in demand has attributed a land value rise of 27.1% in the past year alone. This demand is anticipated to continue throughout 2022 and into 2023.
Mr Reardon added that “The shortage of building materials has caused delays to home building across the country and added 4.0 per cent to the cost of homebuilding in 2020/21, according to the ABS. At the same time, the cost of residential land prices rose by 8.5 per cent, adding further to the cost of new home building,”
Kirribilli Homes notes that that projects are attracting varied project management, site supervision and admin fees due to increased stewardship responsibilities including covid safety plans, tighter site requirements and greater third party insurance accountabilities to protect both works and client’s interests.