HIA report sheds light on Slump in House Renovations
In its discussion paper ‘Renovations Activity - The Recent Deterioration and Outlook Paper’, the Housing Industry Association (HIA) outlined two reasons for the recent slump in housing renovations.
The report explained that renovations activity underwent a significant expansion from the mid 1990s, and remained fairly robust during the global financial crisis (GFC).
However, two important changes in the market in the past 12 months, that were caused by the GFC fall-out, are the cause of the recent sharp contraction in activity.
The first reason is that increased consumer caution since the GFC has resulted in households deleveraging and focused on paying down debt more quickly than before, as opposed to borrowing money to finance home renovations and improvements.
The second reason is related to weak growth in house values, which has limited the ability of consumers to leverage off the equity in their homes to borrow against to fund renovations, the report noted.