Melbourne still the rage for home renovating

Melbourne clearly remains the most popular capital city for home renovations although annual growth levels have flattened recently.

ABS data for the June quarter reports that the national capital city value of building approvals for home renovations and alterations increased sharply by 14.5 per cent to $1.48bn compared to the total recorded over the previous quarter.

Although national renovation activity surged over the June quarter reflecting the usual seasonal uplift, the total remained 0.5 per cent lower than that recorded over the same quarter last year.

Melbourne was again the top capital city for renovation approvals recording $545.2m over the June quarter followed by Sydney with $485.1m then Brisbane well behind with $199.8m.

Despite strong growth over the June quarter, Melbourne and Sydney renovation activity has declined over the past year with Sydney down by 2.8 per cent and Melbourne falling marginally by 0.6 per cent.

Melbourne recorded a national capital city renovation market share of 36.8 per cent over the June quarter which was lower than the 38.7 per cent recorded over the previous quarter. Sydney’s national renovation market share was also lower falling from 34.0 per cent to 32.7 per cent. Brisbane’s home renovation market share however increased from 11.6 per cent to 13.5 per cent over the quarter.

Recent strong prices growth in inner and middle suburban areas has acted to increase renovation activity for home owners reflecting higher land prices and steady building costs offsetting over- capitalisation concerns, strong attachment to established neighbourhoods, high transaction costs for relocation and low interest rates.

Increased renovation also reflects the growth of small-scale professional enterprises flipping properties for profit and taking advantage of high demand for modernised inner suburban homes and the prospect of continued solid capital growth in these areas.

Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson join on LinkedIn and Facebook at MyHousingMarket