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4102.0 - Australian Social Trends, 2002  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 09/05/2002   
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Contents >> Housing >> Housing and Lifestyle: Home renovation

Housing and Lifestyle: Home renovation

In 1999, 58% of owner occupiers stated that renovations had been carried out on their current dwelling in the previous 10 years.

Renovations are a way of achieving desired housing outcomes without moving. People may choose to renovate (rather than move) because they like their house or location, because it is cheaper than moving or to add value to their home.1,2 In addition, upgrading older housing stock after purchase may be a way of entering the housing market in more expensive, established areas. In the last two decades of the 20th century, renovating - whether adding or changing a feature, restoring or extending the house - made an increasingly important contribution to the building industry, which suggests a growing trend towards home renovation.3

In 1999, 58% of owner occupiers stated that some renovations had been carried out on their current dwelling in the previous 10 years (a total of 2.9 million dwellings), while 27% stated that renovations had been carried out on the dwelling in the previous two years (1.3 million dwellings). The relatively high proportion of dwellings renovated in the previous two years reflects in part the beginning of a boom in the building industry prior to the introduction of the GST in July 2000.4 It may also reflect an increase in the popularity of renovating, the likelihood for an individual dwelling to undergo multiple renovations over time, or people’s lower awareness or recollection of renovations which have occurred over a longer period.

This article is restricted to owner occupiers. While renovations are conducted on the dwellings of renter households, they were less common (29% of renter households reported that they lived in renovated dwellings, compared with 58% of owner occupiers). Because they tend to be carried out and paid for by the property owner, the current tenants are less likely to be aware of the costs or nature of renovations carried out either prior to or during their tenancy.


Renovating by owner occupiers
The main source of data for this article is the ABS 1999 Australian Housing Survey (AHS) conducted between September and December 1999, which collected information on renovations carried out on residential dwellings in the previous two and 10 years, as well as other household and dwelling characteristics (see Australian Housing Survey: Housing Characteristics, Costs and Conditions, 1999, ABS cat. no. 4182.0).

Renovations include alterations and additions, but exclude repairs and maintenance to the dwelling (see Australian Social Trends 2002, Housing condition and maintenance). This article refers to renovations which were carried out (to the knowledge of the current residents) in the two years preceding the survey (1997-99) and the 10 years preceding the survey (1989-99). These renovations may or may not have been carried out by the current residents.

This article is restricted to owner occupiers - households whose dwelling was owned by one or more resident, either with or without a mortgage.

Renovated dwellings (homes) are owner-occupied dwellings which in 1999 had, to the owner’s knowledge, undergone some type of renovation(s) in the previous 10 years.

The reference person for each household is chosen using the following criteria, in order of precedence:
  • the person with the highest tenure type ranked in order of owner without a mortgage, owner with a mortgage, renter and other tenure;
  • the person with the highest income; and
  • the eldest person.


People living in renovated homes
In 1999, 62% of family households (compared with 50% of non-family households) lived in dwellings which had undergone some type of renovation in the previous 10 years. Of all family households, couples with children were most likely to live in a renovated home (67%).

Higher income households were more likely to live in renovated dwellings than lower income households (65% of households in the top two income quintiles, compared with 47% in the lowest two). This is consistent with higher income households being more able to afford either renovations or the purchase of recently renovated (and therefore more expensive) dwellings.

In 1999, approximately 63% of all households where the reference person was of workforce age (15-64 years) lived in a dwelling which had been renovated in the last 10 years. Households with a reference person aged 25-44 years were the most likely to live in a renovated dwelling (66%), while those with a reference person aged 65 years or over (retirement age) were the least likely to live in a renovated dwelling (43%). The higher propensity for households with a reference person of workforce age to live in a renovated dwelling in 1999 is linked with the higher incomes of households living in renovated dwellings, as household income is usually highest when its members are employed.

HOUSEHOLDS IN RENOVATED DWELLINGS(a) - 1999

Households in renovated dwellings
As a proportion of all households with selected characteristic
Selected characteristics
‘000
%

Tenure type
    Owner
      With a mortgage
1,476.1
65.4
      Without a mortgage
1,465.9
52.3
Household composition
    Couple only
786.7
56.6
    Couple with children
1,314.8
67.6
    Lone parent
179.1
59.2
    Lone person
488.5
44.8
Income quintile
    Lowest two quintiles
827.8
46.5
    Highest two quintiles
1,557.1
65.2
Period of residence
    10 years or less
1,683.0
60.1
    More than 10 years
1,259.1
55.9
All households
2,942.0
58.2

(a) Owner-occupied dwellings renovated in the 10 years to 1999.

Source: ABS 1999 Australian Housing Survey.


Many owners buy a house with the intention of making changes.1 In keeping with this, most home owners renovated their homes within a relatively short period of acquiring them. Alternatively, many owners purchase a recently renovated dwelling, usually to either obtain an up-to-date older home or reflecting sellers' marketing strategies of renovating their home before selling it to increase the sale price. In 1999, dwellings which had been occupied by the current owners for up to 10 years were somewhat more likely to have been renovated in the previous decade than those which had been occupied by the current owners for more than 10 years (60% and 56% respectively).

People who participated in home renovations often put considerable time into this activity. In all tenure types in 1997, the 2% of men who participated in home renovating spent an average of almost 3 hours per day on renovations, while the 1% of women who participated in home renovating spent 1 hour and 40 minutes per day on renovating their home.5 This reflects the fact that many renovations are not undertaken by residents of the dwelling.

AGE OF REFERENCE PERSON IN RENOVATED DWELLINGS(a) - 1999

(a) Owner-occupied dwellings renovated in the 10 years to 1999.

Source: ABS 1999 Australian Housing Survey.


Renovated dwellings
In 1999, separate houses were the most likely of all dwelling types to have undergone renovations (59%, compared with 52% of semidetached houses and 40% of flats) during the previous decade. Renovations were also more likely to have been carried out on older dwellings, with 61% of dwellings aged 20 years and over having been renovated in the previous decade, compared with 49% of those aged less than 10 years. Renovations (especially kitchens, bathrooms and extensions) are often carried out on older homes to upgrade amenities (see Australian Social Trends 2001, Household amenities) and to meet the lifestyle and needs of the current owners.1 Additionally, they may reflect the design, tastes and innovations incorporated into newer homes.

RENOVATED DWELLINGS(a) - 1999

Households in renovated dwellings
As a proportion of all households with selected characteristic
Selected characteristics
‘000
%

Dwelling structure
    Separate house
2,697.6
59.4
    Semidetached
142.9
51.9
    Flat
88.8
40.1
Age of dwelling
    20 years and over
1,906.2
61.0
    50-79 years
411.1
65.6
    80 years and over
259.6
55.9
All households
2,942.0
58.2

(a) Owner-occupied dwellings renovated in the 10 years to 1999.

Source: ABS 1999 Australian Housing Survey.


With the exception of very old houses, the older a house is, the more likely it is to be renovated. In 1999, 66% of dwellings built between 1920 and 1949 had been renovated over the 10 year period to 1999. In addition to older homes being more likely to need renovating than newer ones, some home owners may be willing to purchase an older dwelling which is in need of renovation.1

In 1999, Australian households indicated that almost 7 million renovations had been carried out on the dwellings of 2.9 million households in the previous decade. This meant that, on average, renovated dwellings had undergone two or more types of renovations over the period. This is consistent with older dwellings being in need of overall upgrading, hence requiring more than one type of renovation.

AGE OF RENOVATED DWELLINGS(a) - 1999

(a) Owner-occupied dwellings renovated in the 10 years to 1999.

Source: ABS 1999 Australian Housing Survey.


Types of renovations
In 1999, 2.9 million households' dwellings had been renovated at least once during the previous decade. The most common types of renovations carried out over this period were kitchen upgrades (1.1 million), pergolas or similar constructions (1.1 million) and bathroom upgrades (almost 1 million). A further 1 million dwellings had undergone other internal renovations.

Kitchen and bathroom renovations are likely to be common because these are high-utility areas which suffer from wear and tear, and tend to date (such renovations were most often carried out on older dwellings). While many rooms can be changed or updated with furniture or a different coat of paint, kitchens and bathrooms are more likely to require the removal and replacement of old fixtures, and may involve tiling, plumbing and new appliances.2

Pergolas and similar constructions are likely to be common renovations because they enhance the possibilities for outdoor living and some provide shade around the house to help with insulation. The addition of security doors or screens to 846,000 dwellings in the decade to 1999 may indicate an increased concern about household security and is in keeping with the promotion of home security in the form of lower insurance premiums.

TYPES OF RENOVATIONS CARRIED OUT(a) - 1999

Households in renovated dwellings
As a proportion of all households in renovated dwellings
Type of renovation
'000
%

Kitchen
1,133.4
38.5
Bathroom
969.7
33.0
Other internal renovations
1,012.4
34.4
Dwelling extension
396.0
13.5
Swimming pool
241.5
8.2
Security doors/screens etc.
845.6
28.7
Pergola/deck/verandah/patio
1,082.6
36.8
Carport/garage
606.2
20.6
Other external renovations
616.8
21.0
All households(b)
2,942.0
100.0

(a) On owner-occupied dwellings in the 10 years to 1999.
(b) More than one answer is possible and therefore components do not add to total.

Source: ABS 1999 Australian Housing Survey.


Renovation costs and financing
The increasing contribution made by renovations to the building industry has led to an expectation that expenditure on home renovations may exceed expenditure on new dwellings by 2002.3 In the year to June 2001, Australians spent $14,321 million on alterations and additions (renovations) to residential dwellings.6 During the same period, new finance commitments for home renovations totalled $3,109 million.7

The 1998-99 Household Expenditure Survey shows an average weekly expenditure of $36 by owner occupier households on housing renovations. This represented approximately 5% of their total expenditure on goods and services.8

The 1999 Australian Housing Survey asked owner-occupier households about their expenditure on home renovations in the previous two years. On average, households which had renovated their current dwelling and incurred associated costs had spent $12,100 on renovations during that period. This average expenditure was double the average cost of renovations ($5,800) and is in keeping with many dwellings undergoing more than one renovation.


Income quintiles
Income quintiles are formed by ranking all households in ascending order by income, then dividing them into five groups (or quintiles), each containing 20% of households.


In 1999, households in the upper income quintiles spent more on their renovations than those in the lower quintiles (averages of $19,100 and $5,800 respectively). While almost a third (31%) of all households who had renovated had spent under $2,500 on these activities, one-third (33%) had spent over $10,000 on their renovations, including 16% who had spent over $20,000.

Renovations which cost the most were dwelling extensions, with households undertaking these renovations spending an average of $30,000 on extensions in the previous two years. Three-quarters of those who had extended their dwelling had spent over $20,000. Renovations such as adding security doors and screens were the cheapest, at an average of $1,200.

Of households whose dwelling had been renovated in the previous 10 years, 4% had a loan for which the main purpose was the renovation of their current home. A further 2% had refinanced their mortgage in the previous three years in order to renovate their home (this refers only to new loan agreements and excludes those who make use of the equity in their home or a redraw facility to add to their loan). These figures increased to 6% and 4% respectively for those who had renovated in the previous two years. It should be noted that this includes only those who either took out a loan or refinanced specifically for the purpose of renovating their family home.

COST OF RENOVATIONS IN PREVIOUS 2 YEARS(a) - 1999

(a) For owner-occupier households whose dwelling had been renovated in the previous 2 years.

Source: Housing Characteristics, Costs and Conditions, Australia, 1999 (ABS cat. no. 4182.0).


Endnotes
1 Baum, S. and Hassan, R. 1999, 'Home owners, home renovation and residential mobility', Journal of Sociology, vol. 35, no. 1, pp. 23-41.

2 Archicentre Ltd 2001, Australian Renovation Trends 2001-2002, Archicentre Ltd (a division of the Royal Australian institute of Architects).

3 BIS Shrapnel, <URL:http://www.bis.com.au/bc3> (accessed 24 January 2002).

4 Australian Bureau of Statistics 2000, Building Activity, June quarter 2000, cat. no. 8752.0, ABS, Canberra.

5 Australian Bureau of Statistics 1997, How Australians Use Their Time, cat. no. 4153.0, ABS, Canberra.

6 Australian Bureau of Statistics 2001, Australian National Accounts: National Income, Expenditure and Product, December Quarter 2001, cat. no. 5206.0, ABS, Canberra.

7 Australian Bureau of Statistics 2001, Housing Finance, July 2001, cat. no. 5609.0, ABS, Canberra.

8 Australian Bureau of Statistics, 1998-99 Household Expenditure Survey.



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