Mortgage interest rates rates create do-it-yourself boom

Australians in the mortgage belt are spending big on DIY home renovations, which rose 5 per cent to its highest level in two years during the September quarter as strong house prices and a tight labour market and high mortgage interest rates encouraged owners to do up their homes themselves. Spending in the quarter climbed to $891 million, its third consecutive rise, according to the Housing Industry Association's Renovation Monitor. Home owners are betting that rising property prices as well as a tight labour market will make renovation worthwhile after three interest rate rises this year curb the supply of new accommodation. "The retention of large capital gains from residential property together with continuing labour market strength is making major renovation projects an enticing proposition," HIA chief economist Harley Dale said. "This is especially the case at a time when land supply constraints, higher interest rates and unjustifiably high government-imposed costs are conspiring to make new residential construction a less appealing option than it should be."A separate report distributed today by the Real Estate Institute of Australia showed average vacancy rates ranging from 1.1 per cent in Canberra to 2.1 per cent in Perth, as higher interest rates restrain borrowing for home construction. According to the September quarter Real Estate Market Facts, annual returns across the country on three bedroom houses ranged between 14.1 per cent and 17.1 per cent over the period from March, 1983, to the present. Some 10,308 households across Australia began major home renovations at an average value of $86,476, the HIA report said. Spending rose fastest in the ACT, where it climbed 68 per cent, with Tasmania second with a 61 per cent rise, while spending fell six per cent in Western Australia, according to the HIA report
Source: AAP