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Australians have enjoyed a booming property market for years, with capital cities and everywhere in between breaking records. In fact, throughout 2021 alone, property values increased by over 22% across Australia. However, as prices have grown, many homeowners have turned to home renovations to enhance their living space without getting involved in soaring auction prices.
This is hardly surprising when you consider the impact of the COVID-19 pandemic on our working lives. With millions of people spending more time at home, a transformed kitchen or bathroom into the space of their dreams definitely makes life more comfortable. Meanwhile, those with children have also decided that a little home improvement could go a long way.
However, the booming renovation services market is showing signs of slowing down, with Australia’s property market more uncertain than it was 12 months ago. With greater financial doubt and pandemic-caused supply issues, everyday Australians are unsure whether a family home renovation is the best thing for their budget. Here, we delve into the details to explore how home renovations aren’t on everyone’s agenda.
According to the latest Australian Bureau of Statistics numbers, home renovations boomed for the 12 months after October 2020. With a mind-blowing $11.82 billion spent on approved renovations across the country, homeowners in Victoria and New South Wales spent much of this cash. This makes perfect sense considering how these states experienced some of the toughest pandemic lockdowns in Australia.
Yet the figures didn’t look too bright at the end of 2021, as several construction industry concerns added up. With many of these issues tied to the pandemic, November 2021 data saw residential building approvals decline by 7.7% from the year prior, while private-sector constructions also fell by 8.1%. But what problems led to this renovation process decline?
Australia is well and truly open for business following some of the world’s toughest lockdowns. However, this doesn’t mean that the supply chains that home renovation projects rely upon have also restored themselves. One of the leading factors affecting consumer interest in a home renovation project is price increases. With up to 50% higher fees for ocean freight, many contractors are finding their essential raw materials for renovating have soared in costs.
These shipping concerns create significant delays, with reputable building companies unable to provide potential clients with solid completion dates for renovations. With many of the world’s most critical shipping ports, including China’s Port of Ningbo-Zhoushan and Port of Shenzhen, closed because of coronavirus outbreaks, this created widespread uncertainty about when home improvements would begin.
Alongside delays in shipping steel, doors, and windows, the world has also experienced a massive timber shortage. With Australia undergoing its worst timber shortage in 40 years, large-scale mills around the globe experienced staff shortages and closures due to pandemic-related problems. This ultimately prevented smooth supply to local builders ready to renovate kitchens and bathrooms.
Even before the pandemic, Australia’s construction industry was already operating at close to maximum capacity because of stubborn labour shortages. Yet these problems only grew worse when the pandemic struck the industry. As supply chain concerns saw an ever-increasing log of renovation jobs added to the pipeline, just finding skilled workers to complete renovations became a big problem.
Australia’s coronavirus cases remained relatively low for much of the pandemic, yet periodic surges in case numbers saw many contractors fall sick and head into isolation. In fact, the industry was halted entirely in Melbourne and Greater Sydney, alongside the whole of South Australia. While these shutdowns made it impossible for contractors to manage a home renovation properly, homeowners simply couldn’t employ a builder to visit the house.
The pandemic also heavily disrupted training and skilled migration programs. With foreign workers typically easing some labour shortages, Australia’s strict border closures meant finding a trusted tradie to work on a space was almost impossible. According to Infrastructure Australia, this could cause around 105,000 positions to go unfilled by 2023.
Of course, home improvements are gradually being finished today. But it’ll take a lot of work to transform a faltering job market and overcome supply chain concerns if your team is looking to seamlessly complete renovations soon. However, there are other significant signs that the housing boom might be over in parts of Australia, especially in hotspots like Melbourne and Sydney.
For one, interest rates will rise. Although the status quo in recent years has meant it’s never been cheaper to borrow money from the bank, the Reserve Bank of Australia has signalled a rate increase for the first time in a decade. With the latest figures showing inflation up to around 3.2%, essential householders will be more cautious about spending their cash on a dream home renovation project.
It’s undoubtedly a complicated time for home renovations in Australia. But identifying the essential digital tools that’ll make the biggest difference to your success is a great way to form new ideas and support your company’s future. To build the construction business of your dreams, you need to work closely with FieldPulse.
Our comprehensive business management app means you can architect an outstanding project from the office or on the move. With robust client information features, you can talk to and instant message homeowners whenever you need to. Our app’s stellar features also enable you to swiftly review and process invoices to avoid any wrong turns.
While complete renovations required untold amounts of paperwork in the past, FieldPulse has become an essential tool to understand how your project is progressing while creating the best workflow for the job. Ready to learn more? Schedule a free demo and find out how FieldPulse can save you time and money today.
