Renovators put the brakes on $11b market as costs crunch spending
Australia’s $11 billion renovations market is at the start of its first significant downturn in a decade amid a broader construction crunch and as interest rate increases and rising costs crimp spending on building.
On Monday, GWA Group, one of the country’s largest suppliers of bathroom and kitchen products, said it expected its renovations segment to remain subdued until at least the middle of next year. The company behind brands like Caroma, Clark, Dorf and Methven said, based on projections by BIS Oxford Economics, the market would slide by 8 per cent over the year.
Other companies reliant on home renovations are also feeling the slowdown. The Good Guys, a specialist in whitegoods, ovens and kitchen appliances, owned by JB Hi-Fi, said sales fell 8.1 per cent in the three months to June 30 and 12 per cent in July alone compared with that time last year.
Michael Tsolakis, who runs Sydney construction group Beltam Projects, says families are looking for ways of reducing the costs to renovations. Oscar Colman
“No doubt people will be reconsidering any renovations, and you know that that will have an impact on the overall category,” said JB Hi-Fi chief executive Terry Smart. “Where we have a bit of an advantage is being a discount retailer, so those that are doing it will then be looking for value.”
“Our business is heavily skewed to a replacer [market]. Renovators tend to go a bit more upmarket. But they’ll now hunt for value, and we will get an opportunity to engage with them,” Mr Smart added. Sales at JB Hi-Fi stores outside The Good Guys rose 2.7 per cent in the quarter to June 30.
Theslowing spending on renovations points to softer sentiment in a key driver of economic growth, home building, and will affect the
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