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Renovation activity to increase after 10 year low: HIA
Topic Started: 14 Nov 2013, 01:00 PM (1,243 Views)
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Renovation activity to increase after 10 year low: HIA

By Jennifer Duke
Thursday, 14 November 2013

The Housing Industry Association's (HIA) new forecast, the National Outlook, is noting an expectation for renovation activity to pick up over 2013/2014 after a 10 year low.

A higher level of new dwelling commencements was also said to be expected, with green shoots being seen for the majority of states and territories, said HIA senior economist, Shane Garrett.

"The improving level of dwelling commencements achieved in 2012/13 will be consolidated this year before moving up a further leg in 2014/15,"said Garrett.

"Meanwhile, renovations investment is expected to grow in a majority of states and territories after falling to a ten year low during 2012/13," he said.

Growth in housing starts was noted to be concentrated in the larger states - particularly New South Wales, Queensland and Western Australia, with renovation growth more broadly based.

"Looking further ahead, we see dwelling commencements lifting above the 170,000 per year mark by 2016/17, matching the highs achieved during the post-GFC stimulus," he said.

"Over this timeframe, renovations activity is also likely to increase steadily, reaching $30.3 billion by 2017/18."

Garrett's expectations are that this is on the back of record low interest rates and strong population growth, and points to the importance of planning reforms and infrastructure delivery to facilitate the needed supply.

"There currently exist many bottlenecks around land supply, infrastructure and the time taken to achieve planning approval for new dwellings," he said.

Read more: http://www.propertyobserver.com.au/news/renovation-activity-to-increase-after-10-year-low-hia/2013111366354
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Half of home owners plan renovations, study shows

December 17, 2013 - 12:46PM
Christina Zhou

More than half of Australian home owners plan to renovate in the next four years, a survey shows.

Home renovations are expected to inject about $22.4 billion into the economy within the next 12 months, according to Galaxy Research findings.

Of more than 2000 Australians aged between 18 and 64, surveyed nationally, the average budget for those who planned to renovate was $16,130 while Gen Y planned to spend an average of $21,961.

Galaxy research director Peter Matthew said the figures were based on a questionnaire about how much the respondents were willing to spend on renovations in the next 12 months.

The participants were given a selection of price brackets, ranging from less than $5000 to $75,000 or more.

Read more: http://smh.domain.com.au/real-estate-news/half-of-home-owners-plan-renovations-study-shows-20131217-2ziau.html
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Wealth Effect

Effect on individuals

The effect would cause changes in the amounts and distribution of consumer consumption caused by changes in consumer wealth. People should spend more when one of two things is true: when people actually are richer, objectively, or when people perceive themselves to be richer—for example, the assessed value of their home increases, or a stock they own goes up in price.

Demand for some goods (especially Inferior goods) typically decreases with increasing wealth. For example, consider consumption of cheap fast food versus steak. As someone becomes wealthier, their demand for cheap fast food is likely to decrease, and their demand for more expensive steak may increase.

Consumption may be tied to relative wealth. Particularly when supply is highly inelastic - or in the case of monopoly - one's ability to purchase a good may be highly related to one's relative wealth in the economy. Consider for example the cost of real estate in a city with high average wealth (for example New York or London), in comparison to a city with a low average wealth. Supply is fairly inelastic, so if a helicopter drop (or gold rush) were to suddenly create large amounts of wealth in the low wealth city, those who did not receive this new wealth would rapidly find themselves crowded out of such markets, and materially worse off in terms of their ability to consume/purchase real estate (despite having participated in a weak Pareto improvement). In such situations, one cannot dismiss the relative effect of wealth on demand and supply, and cannot assume that these are static. (see also General equilibrium).

However, according to David Backus, a NYU economist, the wealth effect is not observable in economic data, at least in regards to increases or decreases in home or stock equity.[2] For example, while the stock market boom in the late 1990s (q.v. dot-com bubble) increased the wealth of Americans, it did not produce a significant change in consumption, and after the crash, consumption did not decrease.[2]

Economist Dean Baker disagrees and says that “housing wealth effect” is well-known and is a standard part of economic theory and modeling, and that economists expect households to consume based on their wealth. He cites approvingly research done by Carroll and Zhou that estimates that households increase their annual consumption by 6 cents for every additional dollar of home equity.[3]

The wealth effect and the Paradox of Thrift are contradictory. The paradox assumes that people will spend when they feel wealthy, based on the wealth effect, but not when they are actually more wealthy.
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Small renovations and home building to become easier: Brad Hazzard

By Jennifer Duke
Thursday, 19 December 2013

New changes to the State Environmental Planning Policy (Expempt and Complying Development) are set to make renovations easier, according to New South Wales Planning and Infrastructure Minister, Brad Hazzard.

After two years of consultation, up to $7,000 will be saved on the cost of building a new home by getting approval as a complying development, said Hazzard.

“They will give homeowners and businesses faster, simpler approvals for low-impact developments such as building or renovating a home or business," he said.

“This will help streamline the delivery of new housing, create jobs and deliver more certainty in the planning process.”

These changes also impact on businesses, which are now able to open 24 hours in the two weeks leading up to Christmas 2014, without requiring planning approval. This will only be in business zones where residents are not affected.

For homeowners, it will make it easier to:

- Install aerials and antennas

- Build fences, driveways and paths

- Get fast-track approvals for single storey backayrd studios

- Get fast-track approvals for home food production businesses

Fast track approvals are also going to be expanded to included homes and home extensions partially built to one side boundary. This will be for lots between eight and 12.5 metres. Currently it is between eight and 10 metres.

Commercial building alterations will also have red tape cut, including internal changes and erecting of signage.

If you're a neighbour within a 20 metre radius of a complying development proposal, you will need to be given 14 days before the application is approved, and then seven days before construction stards (previously it was two).

Privacy rules will be increased, with screens required for balconies and windows overlooking neighbours.

NSW executive director of the Property Council of Australia, Glenn Byres, agreed with the changes and the red tape reduction to lower the time and costs faced by property owners and buyers.

“Residents shouldn’t have to jump through major planning hurdles if what they are doing is low-impact and doesn’t affect neighbours," said Byres.

“Roughly a third of regular development applications are for minor developments worth less than $25,000 – showing that there is room for significant improvements in this area," he said.

Read more: http://www.propertyobserver.com.au/new-south-wales/small-renovations-and-home-building-to-become-easier-brad-hazzard/2013121867033
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