Ever since The Block hit our screens in 2003, Aussies have taken to renovating their homes with relish. The banks are even in on the action with a significant uptick in loans for home renovations in the past few years.
This resurgence in bank loans for home improvements follows an initial increase in 2003 (coinciding with The Block on TV) with a gradual decline over the next ten years until about 2014 when the banks started to take a renewed interest in funding home renovations. So you might think that Aussies went off the boil in those intervening ten years and weren’t interested in renovating their home?
Well, you would be wrong, because the rate of renovations over this time period didn’t change at all. Aussies were still renovating their homes, despite the fall in bank loans for home improvements. Clearly, Aussies were using their own cash to fund their renovations, but for some reason, the rate of bank loans for these renovations has begun to increase once again. Why is this?
Why are Aussies borrowing to fund their renovations again?
The obvious answer is that they no longer have the cash to renovate their homes, so they are turning to the banks for a loan. This may well be a sign of the political climate, job losses, higher outgoings, etc., where families no longer have the savings to spend on renovations and can’t wait until they do have the money, so they are borrowing from the banks. However, regardless of the cause of this increased borrowing behaviour, this all begs the question – why are Aussies so intent on renovating?
Why do Aussies love to renovate?
Apart from simply wanting to increase the value of their home or wanting to significantly improve their lifestyles by renovating their homes, what other reasons are there for Aussies to keep renovating?
One reason is because their family has increased in size and they need more bedrooms, bathrooms and living rooms or maybe they want a parent’s retreat, a home office or a granny flat for their elderly relatives? All these are very good reasons to renovate and they will also increase the value of their properties. The gradual decline in Australia’s birth rate since 2010 however, doesn’t support this hypothesis and even if it did, why don’t they just move to a bigger house instead of renovating?
Location could be a big factor in the uptick in home loans for renovations, because many people bought their current home because they wanted to live in that particular community. Their homes may be close to work, relatives, friends or the kid’s schools, they might have an awesome view or be near the beach and simply don’t want to move. The solution therefore, is to renovate their homes to make it reflect their changing lifestyles.
Of course, the answer could be much simpler and could be due to the rising cost of housing in Australia. Moving to a larger home can easily cost a family $100,000 or more, whilst renovating their current home might only cost them $20,000, depending on their needs.
For many Aussies, their reason for renovating is most probably a combination of these factors and the result? Aussies have a home they love in a neighbourhood that feels like a real community.