Uptick in renovation interest yet tradies' win rate still low

Photo by Charles Deluvio on Unsplash

Trade quotes platform Buildxact reported its volume of quotes was up in Q3 2020, but the win rate was down to 13.65% in September.

Buildxact's reporting shows there were 32,463 quotes on its platform in the third quarter, an increase of 31.7% from the second quarter.

The platform's subscriber growth in that time also grew 21%. 

September's win rate is down from July's - which was 17.71% - with just 1,338 jobs won out of more than 10,000 quotes.

Throughout the second and third quarters, renovations accounted for 50% of all projects, and since July, average quote value has been above $150,000 - above the HomeBuilder renovation threshold.

The average time taken for a quote to convert to a win is about 50 days.

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September also represented a year-to-date peak of average quote value at $175,711. 

Per builder, the average number of quotes won was 2.8 in September, down from a high of 3.0 in May.

Buildxact CEO David Murray said tradies could also get a boost in the lead up to Christmas.

"As people have been restricted with domestic and overseas travel and are needing to spend more time at home, many are choosing to put their holiday budget towards renovations and home improvements instead," he said.

“Growth in profit margin suggests that builders have sufficient work and are not under pressure to reduce prices. Profit margin is also helped by the fact that there is more demand for renovations than new builds. Renovations attract a higher margin."

The third quarter average profit margin rose to 14.2%, up from 13.8% in the second quarter. 

Profit margin peaked in August at 15.09% and lowered to 14.06% in September.

The state of Victoria's trades industry

Despite strict lockdowns, Victoria also outpaced average quote values, with an average of $275,072 in the third quarter.

The next-closest was Tasmania at $230,449. 

However, the lockdown also caused a reduction in the number of quotes after July, and average quotes per builder was just 14.7 in Victoria, much lower than states not so affected by COVID-19.

Western Australia's tradies saw an average of 19.7 quotes, South Australia 17.9, and Queensland 16.6.

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Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

• The big four banks are: ANZ, CBA, NAB and Westpac
• The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
• The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
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Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

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*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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