The family home you’ve loved for so long has finally hit the point of no return. The kitchen and bathrooms need updating, the foundations are starting to feel a bit shonky, and the roof tiles have seen better days and aren’t holding up well when it gets a bit rainy.
For so long, this situation would have called for a contemporary renovation to bring the property up to your high standards. But in 2022, the cost of renovation and construction across the nation has risen at an alarming rate, making the option of going to market and purchasing a new home more appealing than renovating an old one. And the numbers don’t lie.
At the end of 2020, the average Victorian housing project cost around $245,000 according to the Victorian Building Authority. At the end of 2021, that number rose to $315,000.
CoreLogic’s Cordell Construction Index (CCCI) for the 2nd quarter of 2022 showed national residential construction costs increased 10.0% over the 12 months to June 2022, which is the highest annual growth rate on record outside of when the GST was introduced. Victoria’s CCCI recorded a 2.5% increase in construction costs over the June quarter, up from 2.4% over the March quarter.
These numbers are no real surprise considering the surging cost of materials. According to the Australian Bureau of Statistics for the year ending March 2022, steel rose by 42.1%, timber, board, and joinery products were up 20.6%, metals used for garage doors and aluminium windows shot up 16.2%, and electrical equipment was up 13.9%. The rising costs have even seen some major Victorian builders go into liquidation.
“There’s also no reprieve on the supply side either with a lack of materials, elevated fuel costs and broader inflationary pressures. All of these factors have an impact and are likely to push building costs higher for some time yet,” said Corelogic Research Director Tim Lawless.
Costs asides, there are many other factors which are making it a nightmare for renovators and builders at the moment. There is a large timber shortage nationwide which is set to delay home building and renovations through to 2023. There is also a long wait for trades to actually carry out work. So many companies have a backlog of jobs to be completed (many halted by restrictions during COVID-19 lockdowns in 2020-2021) and these companies are still playing catchup, meaning home owners are waiting months for availability.
All this considered, should you renovate or extend your current home or even build a new one, or sell and buy? The latter certainly seems the better option going into the 2nd half of 2022.