Why 2024 is the year of the home renovation

For anyone looking to renovate a home in 2024, the message is clear; do it sooner rather than later.

While keen renovators could still face difficulty finding tradespeople, they’re being urged to make the most of stabilising building costs before a potential surge in demand later this year, off the back of expected interest rate cuts.

Sydney builder Chris Triantis said there was a huge shortage of good, qualified tradies that was getting worse.

“The government is trying to help by bringing in migrants, but a lot of those aren’t from construction,” he said.

“Some of the best [tradespeople] have actually doubled their rates as a result of so much demand outstripping the supply. And all of the tradesmen around are pretty busy.”

The latest data from the Housing Industry Association (HIA) cements his claims. Although the prices of home building materials haven’t changed in the past quarter, and shipping costs are sharply down, tradies remain high in demand but low in availability. The average price of all skilled trades showed an official 4.4 per cent rise in the past year.

HIA chief economist Tim Reardon said this was hard to remedy in the short term, and the shortage was putting a squeeze on renovation work. This could be particularly difficult later in 2024 when interest rates may well be cut and the economy could pick up, spurring an escalation in the volume of renovations being undertaken.

“The ongoing growth in house prices is slowing, but prices have increased dramatically in the last four years,” Reardon said. “As a result, people will still continue renovating as the cost won’t be significant compared to the rising value of their homes.”

Triantis, who’s been running CBT Developments for the past 15 years, is currently busy on a number of renovations, with seven jobs lined up for the start of 2024. He believes it is an excellent time to renovate, however, with the settling of building material prices providing more certainty for the market.

“Before, we’d price a job and then just hope costs wouldn’t go up too much,” he said. “Now we’re a lot more secure about pricing and all of our contracts are fixed price. It gives both us, and our customers, a lot more confidence going forward.”

In Melbourne, Morris Terzo of Jim’s Construction and Jim’s Building Inspections said getting a builder could still prove difficult, as a lot of tradies could be busy with new builds given the current housing shortage, or engaged in finishing half-built projects left after building company collapses, like Porter Davis.

“But on the plus side, there’s a lot that’s happening in this space that’s good,” Terzo said, noting the rise of new digital contract platforms with payment protection, which offer more security for people contracting to have renovations done.

“A cap might be put on insurance costs too which were getting out of hand, and that could even mean deductions. Together with the slowing rate of price growth of materials, the whole landscape is a lot more normal and people seem much happier to proceed.”

HIA’s Reardon said the average price of a new approved house in the September quarter, was up 11.5 per cent year-on-year. This and the concurrent rise in house values, and people’s wealth, makes them keener to renovate than to relocate.

“Since the pandemic, people spend more time at home, so in the course of the decade, renovations will continue to be high,” he said. “We’ve seen some extraordinary rises in the values of homes, so they can absorb the cost of a renovation.

“We’ve seen core building materials, like timber and steel, falling in price, while energy-intensive materials, like cement, glass and aluminium, have risen. But, overall, we’re seeing those big price increases of 2022 abate.”

There’s also a major drive to educate renovators about the cost savings they can claw back as a result of factoring in energy efficiency when they plan projects.