A sparkling new kitchen, extra bathroom or adding an extension won’t be cheaper this year than it was last year, but getting a hold of both materials and tradies to do the job should be a lot less painful.
Many homeowners’ renovation dreams went down the drain last year as building costs soared, vital materials like GIB plasterboard became scarce and builders were too busy to provide quotes or even return calls.
Although building costs are continuing to rise – albeit at a slower rate – industry experts say a slowdown in the new-build market will make it easier for homeowners to nail down a builder to carry out the much-desired work, especially later in the year.
NZ Institute of Quantity Surveyors president Martin Bisset says people are now looking at renovating because they can add value to their current property and get additional space without the hassle of having to buy and sell.
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But carrying out renovations in 2023 is still going to be expensive, he adds, eventhough most, if not all, building materials are now readily available and tradies are expected to have less work in the second half of the year.
The latest CoreLogic Cordell Construction Cost Index (CCCI) figures released this week suggest the long-awaited slowdown might be coming with prices only rising 1.7% in the last quarter of 2022 compared to 3.4% in the previous quarter.
Bisset says price increases are slowing down, but some materials such as GIB plasterboard, which is going up by 15% in February, will add to the renovation bill.
“It’s not going to get any cheaper. I think rates are slowing down, they are not going up as much as they were last year. Although there’s that big increase in plasterboard, I don’t think we are going to see the sort of increases that we saw last year and that’s probably because we’ve got a little bit of less delays happening.”
New Zealand Certified Builders’ Association chief executive Malcolm Fleming says that for the first time in over three years homeowners will be able to get a hold of builders as demand for new homes and multi-residential complexes softens and they look for other work.
As the construction of new buildings slows down, tradies for home renovations may be easier to secure. Photo / Getty Images
With pressure easing on the industry, there is also less chance of hold-ups or costs fluctuating massively so the project should run more smoothly, he adds.
Fleming urges those looking to renovate to carry out due diligence around who does the work. This includes obtaining quotes, checking they have the proper qualifications and ideally are a member of an industry association that supports them and provides them with contracts.
However, CoreLogic chief property economist Kelvin Davidson says builders are still clearing the huge number of consents that have already been granted so they might still be tied up for the next six to 12 months.
“People might be willing to take on renovation projects when they might have previously said no. The lead time might be a bit shorter as well, materials a bit more available. So, it’s a better time to renovate probably than it has been for a couple of years.”
Further down the track there is also potential that more competition for renovation work could see some builders prepared to take a hit on the profit margin in order to win the job, he adds.
“But I doubt it will be that much – I suspect probably the benefit for people wanting to renovate is actually being able to get someone to come and not having to wait as long as they have previously.”
Refresh Renovations director Chris Caiger says last year had been “awful” for renovations because of supply chains up in the air and a false boom in the building sector.
Pressure is starting to ease off and getting tradies will get even easier as the year goes on.
“It’s not like it is suddenly incredibly easy, it’s just the difficulty is going out of it.”
Maintain to Profit Renovations director Mark Trafford says renovating is an attractive option for the average Kiwi who is still struggling to get their head around the fact that their house value may be worth 10, 15 or even 20% less than what it was 12 months ago.
And with a lot of factors for renovating looking more favourable this year, Trafford says people are opting to do this rather than take a gamble on selling.
“They don’t want that risk ... the safer option is to borrow the money if they can and create what they want.”
But securing finance could still be a challenge for people wanting to improve or extend their existing home, and he suggests that homeowners make sure they have bank approval for the renovation before doing anything else.
“Finance is probably going to be the only sticking point. Because the value of your property is probably less than what it was 12 months ago.”
