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The state of the economy can also have an impact on renovation costs. During an economic downturn, homeowners may be less likely to invest in home renovation projects, which can lead to a decrease in demand for renovation services.
However, if the economy continues to improve, homeowners may have more disposable income to invest in renovation projects, which could drive up the cost of renovation.
With a predicted recession on the horizon manufacturers might be convinced to offer more competitive prices as they’ll want to sell more products.
But heed this warning, during an economic downturn some smaller businesses may not survive, so we advise consumers to do their research and choose a builder who’s reasonably priced, reputable, and has mechanisms in place to avoid bankruptcy.
The cost of materials used in renovation projects can also fluctuate based on a variety of factors. For example, if the cost of raw materials increases due to tariffs or supply chain disruptions, this can lead to higher renovation costs. On the other hand, if new materials are introduced to the market that is more cost-effective, this could lead to lower renovation costs.
Some materials will become more available in Australia over the year ahead. Certain products, like tapware and different types of tiles, however, will continue to face shortages in various parts of the country, which means homeowners may have to choose substitutes.
There will continue to be supply chain issues with the availability of some products, but this is predicted to ease over time. And while prices will continue to be elevated, they won’t skyrocket.
But those costs only make up around 10% of the total costs, the main bulk of renovation costs is skilled labour.
The cost of labour can have a major impact on renovation costs. Currently, there is a shortage of skilled labour in the construction industry, this has led to higher labour costs.
Experts forecast that the surging construction cost inflation may ease. The chief economist of the Housing Industry Association, Tim Reardon is optimistic coming into 2023. He believes that although construction costs rose 20% last financial year, they will begin to plateau and only rise 5-7% in 2023-2024.
Finally, government policies can also influence renovation costs. For example, changes to building codes or environmental regulations can increase the cost of materials and labour. Conversely, if the government introduces incentives or tax breaks for home renovation projects, this could lead to lower renovation costs.
House extensions and major renovations are expensive, but they also increase the value of your home. The cost and inconvenience of having renovations done or having an extension added to your home are also less compared to the alternative of finding a new place to live, selling your home and relocating along with all of your belongings.
If you’re thinking about renovating to add value to your home, you need to plan your project with care. Some renovations – for example, installing a high-end kitchen in an average home – may be more expensive than the value they add to your home. In general, renovations shouldn’t cost more than 5 to 10 per cent of the value of your home. In this range, you can expect to profit from your renovations.
You’ll have to do your homework to find out how much your home extension or renovations will add to the value of your home. Then get quotes from Local Expert to find out how much your extension will cost.
To afford the rising cost of renovations, many Australians are borrowing money against the increased price of their home to finance their home improvement projects. There are various ways to do this, including:
In many cases, a renovation loan won’t raise your existing monthly payments substantially.
Read more: How to finance your renovation
Predicting whether renovation costs will go down in 2023 is difficult, as it depends on a variety of factors. However, it’s important to keep in mind that renovating a home is an investment that can increase the value of your property and improve your quality of life. If you’re considering a home renovation project, it’s essential to do your research, obtain multiple quotes, and work with a reputable contractor like Local Expert to ensure that you get the best value for your money.
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