Economic pressures fail to slow home renovations

Australians are still keen to undergo renovations to their homes despite domestic and global economic pressures.

New data released by the National Australia Bank showed renovation loan demand rose 16 per cent year on year to April 30.

The figures are showing interest in renovating remains solid, even as households keep a close eye on how costs may shift in the months ahead.

All major states across the country experienced renovation loan growth with Queensland leading the way at 25 per cent, followed by Western Australia (17.9 per cent), South Australia (15 per cent), Victoria (10.8 per cent) and NSW (10.7 per cent).

While building and labour costs have come off their recent peaks, NAB economists expect rising fuel prices linked to global tensions could push up renovation costs further, especially for materials and transport.

NAB executive home lending, Denton Pugh, said demand for renovations was continuing but households should plan carefully as costs may become more volatile.

“We’re still seeing demand for renovations, with lending up 15 per cent in the past month alone but the risk is costs could begin creeping higher again as fuel prices flow through to building materials and labour,” Pugh said.

“We know many Australians are renovating to make their homes more liveable, whether that’s creating space for a growing family, enabling hybrid work, or improving energy efficiency.

“Renovations remain a great way to add value but, in the current environment, it’s important to plan ahead, build in buffers and stay flexible as conditions change.

“Simple steps like locking in quotes early and carefully timing your build can make a real difference to the final cost.”

With costs potentially becoming less predictable again, Pugh encouraged homeowners to pause, review their plans and plan ahead.

Five practical tips to help manage renovation costs:

• Build a buffer into your budget – with costs still shifting, setting aside a 10–20 per cent contingency can help manage unexpected increases.
• Lock in quotes where possible – understanding which costs are fixed and which may move with fuel or supply chains can help avoid surprises.
• Plan around available materials – choosing materials that are easier to source can reduce delays and cost blowouts.
• Avoid starting too early – waiting until key materials are on site can prevent costly delays.
• Focus on upgrades that reduce ongoing costs – energy efficient improvements can help lower bills over time.