All eyes will be on the Federal Reserve Boards decision on Tuesday, February 18, on the directorateDevelopment of interest rates in Australia.
With inflation numbers looking better, the likelihood of a rate cut in 2025 has increased significantly.
Whether this happens on February 18 or shortly thereafter, we will no doubt receive guidance in comments from Reserve Bank Governor Michelle Bullock and the Board’s post-meeting statement.
Lower interest rate forecasts
There was a cautious but undoubtedly positive mood in December, leading many to predict a cut in February.
As borrowing costs fall, people who may have been put off making renovations by rising interest rates in recent years will no doubt start thinking again about how to extend their homes.
Material costs and labor shortages
Although interest rates are an important factor when it comes to consumer financing of large projects like renovations, they are not the only influence on whether or not people undertake a home renovation.
In recent years, the cost of renovations has increased, due to higher material costs following the COVID-19 pandemic and a labor shortage, also due to some tradesmen returning to their country of origin during this period.
The forecast for 2025 assumes that material prices have largely stabilized and will remain stable.
However, that doesn’t mean that issues like exchange rate fluctuations won’t cause some volatility.
Advantages of established builders
For this reason, hiring larger and more established renovation contractors is a smart move, as they have better purchasing power due to their economies of scale, have more established connections with suppliers, and are able – and have the experience to know they should – to buy in advance.
Another general piece of advice for those looking to renovate is that they should also work with a builder who offers a fixed-price contract. This also offers consumers protection against short-term fluctuations.
There is also further positive impetus on the labor market for skilled trades with the federal government’s apprenticeship funding announced at the end of January. Industry associations such as the Housing Industry Association (HIA) have done this welcomed this initiative with optimism that this will help attract and retain the key trades required for construction.
Impact of land prices
In one recent article in the Sydney Morning HeraldHIA chief economist Tim Reardon said he expects renovations to be strong in 2025 as the combination of a slowdown in new home construction and a rise in property prices will convince homeowners that it is better to renovate their existing home rather than build a new one.
Less DA delays
One of the other potential barriers to renovation, delays in development applications, is also improving. The Latest data from the NSW Government shows that the average days of accommodation in 2024-25 fell to 13 days from 17 in 2023-24, the lowest since these figures began to be published in 2022
Do you want to do a renovation in 2025?
If you’re looking to expand your home in 2025, we’d love for you to consider speaking to ArticleSubmission.news.
As one of Sydney’s oldest design and construction builders with more than 45 years ArticleSubmission.news specializes in home additions and extensions and can help you plan and deliver your major renovation with a level of security that few others can offer.
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