Home News Covid lockdowns cause a rise in home renovation spending

Covid lockdowns cause a rise in home renovation spending

As intent to renovate strengthens, new data reveals that home renovation spending has grown, while financing with credit cards dropped.

By Will Gration

First published on 28 Sep 2021

Covid lockdowns cause a rise in home renovation spending

New data from the 2021 'Houzz & Home' survey of more than 2,000 Australian respondents shows that home renovation spending has grown 5% in the last year to a median of $21,000.

Meanwhile, payment through credit cards fell from 20 to 13% between 2019 and 2020 with cash remaining king, making up 81% of home renovation payments.

Why the rise in renovations?

Managing Director of Houzz Australia-New Zealand, Tony Been, said that once the initial concern from the pandemic passed, homeowners had the time and financial means to start their delayed projects.

"This pent-up demand, along with long-standing market fundamentals empower homeowners to continue investing in their current homes," Mr Been said.

With the pandemic limiting homeowners to their residence, the share saying they had been wanting to pursue home renovations all along but finally had the time, saw an increase by four percentage points in 2020.

The survey also found that those homeowners who reported being able to, at last, finance their long-awaited renovations rose from 34% in 2018 to 35% in 2020.

Another renovation trigger was that over a quarter of homeowners stated it was more affordable to renovate instead of moving home to find the right fit.

This growth is expected to continue as 48% of respondents said they plan to renovate in 2021.

Millennials step up their spending

The median renovation spend for Millennials has jumped from $19,000 in 2019 to $22,000 in 2020.

This means the Millennials have overtaken Gen Xers' median spend of $20,000, which was historically higher.

Despite this, Gen Xers' top 10% of project spend at $200,000 surpassed that of the Millennials' at $79,000.

Baby Boomers still have the highest median spend at $22,600.

The Houzz & Home survey reported that as Millennials don’t have the cash reserves from selling previous homes that the older generations do, they are more likely to use credit cards.

What are the main areas being renovated?

The survey found that renovations to homeowners' kitchens were most popular with 54% of respondents changing the layout of their kitchen.

Forty per cent of respondents improved their plumbing, electrical or HVAC systems.

Interior project remains the most popular however at 72%, however more than half of homeowners also indicated that they had done work to their outside areas.

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Lender	Home Loan	Interest Rate	Comparison Rate*	Monthly Repayment	Repayment type	Rate Type	Ongoing Fees	Upfront Fees	Max LVR	Tags	Features	Link	Compare	Promoted Product	Disclosure
loans.com.au	loans.com.au Green Construction Home Loan IO <90%	5.93% p.a.	6.19% p.a.	$2,471	Interest-only	Variable	$0	$530	90%	Owner Occupier Variable Interest-only 10% Min Deposit More details	Interest only during construction period Offset sub-account available after completion Unlimited additional repayments after completion	More details	Compare	Promoted	Disclosure
Macquarie Bank	Macquarie Bank Basic Home Loan (Owner Occupier, Principal and Interest, max LVR 80%)	5.69% p.a.	5.71% p.a.	$2,899	Principal & Interest	Variable	$0	$350	80%	Owner Occupier Variable Principal & Interest 20% Min Deposit Redraw More details		More details	Compare		Disclosure
Great Southern Bank	Great Southern Bank Basic Variable - Owner Occupier Construction (LVR is above 80% and less than or equal to 90%)	5.94% p.a.	6.00% p.a.	$2,475	Interest-only	Variable	$0	$835	90%	Owner Occupier Variable Interest-only 10% Min Deposit Redraw Extra Repayments More details		More details	Compare
Firstmac	Firstmac Solar Construction Home Loan I/O <90%	6.14% p.a.	6.53% p.a.	$2,558	Interest-only	Variable	$null	$721	90%	Owner Occupier Variable Interest-only 10% Min Deposit Extra Repayments More details		More details	Compare
Australian Military Bank	Australian Military Bank Construction Loan	6.24% p.a.	6.31% p.a.	$2,600	Interest-only	Variable	$0	$450	80%	Owner Occupier Variable Interest-only 20% Min Deposit Extra Repayments More details		More details	Compare
loans.com.au	loans.com.au Green Construction Investor Loan IO <90%	6.44% p.a.	6.41% p.a.	$2,683	Interest-only	Variable	$0	$530	90%	Investor Variable Interest-only 10% Min Deposit More details		More details	Compare
AMP	AMP Construction Loan (Investment, Interest Only)	6.74% p.a.	7.51% p.a.	$2,808	Interest-only	Variable	$20	$644	90%	Investor Variable Interest-only 10% Min Deposit Extra Repayments More details		More details	Compare
La Trobe Financial	La Trobe Financial Residential Construction Loan	7.89% p.a.	8.22% p.a.	$3,631	Principal & Interest	Variable	$0	$0	75%	Investor Variable Principal & Interest 25% Min Deposit Redraw Extra Repayments More details		More details	Compare
Freedom Lend	Freedom Lend Owner Occupied Construction Variable IO 90%	7.19% p.a.	6.90% p.a.	$2,996	Interest-only	Variable	$0	$1,212	90%	Owner Occupier Variable Interest-only 10% Min Deposit Redraw Extra Repayments More details		More details	Compare
Gateway Bank	Gateway Bank Construction Loan	8.18% p.a.	8.25% p.a.	$3,732	Principal & Interest	Variable	$0	$900	80%	Owner Occupier Variable Principal & Interest 20% Min Deposit Offset Redraw Extra Repayments More details		More details	Compare
Beyond Bank	Beyond Bank Home Buyer Scheme Total Home Loan Package Variable - Building Loan	5.94% p.a.	6.36% p.a.	$2,978	Principal & Interest	Variable	$395	$null	95%	Owner Occupier Variable Principal & Interest 5% Min Deposit Redraw Extra Repayments More details		More details	Compare
Bank Australia	Bank Australia Clean Energy Home Loan - New Build (LVR <90%)	5.18% p.a.	5.63% p.a.	$2,739	Principal & Interest	Variable	$350	$0	90%	Owner Occupier Variable Principal & Interest 10% Min Deposit Offset Redraw More details		More details	Compare

Green Construction Home Loan IO <90%

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Interest only during construction period
Offset sub-account available after completion
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Monthly repayments: $1,977

5.93% Advertised Rate (p.a.)

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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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Will Gration

Will Gration joined Savings in 2021 as an intern, and is currently completing his second year of a Bachelor of Business, Majoring in Finance at the Queensland University of Technology.

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