Renovations may lead to building spike

HOME renovations could be the key to an upswing in building activity around Queensland, a major industry outlook revealed on Monday.

The Master Builders annual building industry outlook forecast 28,000 new housing starts as well as more renovation activity to drive a resurgence of building in the next year.

Housing policy director Paul Bidwell said despite low levels of housing activity in 2011-12, he was optimistic housing starts would begin to grow again.

"After a disappointing result in 2011-12 with just 26,311 total dwelling commencements, our forecast is for 28,000 starts in 2012-13 (a 7.7% increase over 2011-12), and a more optimistic forecast of 32,000 starts in 2013-14 (a 14.3% over our 2012-13 estimate)," he said.

"We believe much of the rebound in activity will be centred on detached and low-rise attached dwellings, rather than high-rise unit developments, mainly due to the ongoing tight credit environment, which is making high-rise apartment projects difficult.

"But the forecast depended on improved consumer and business confidence, continued low interest rates and recent changes to the First Home Owners Construction Grant.

"We anticipate the renovation market will also remain solid in 2012-13, with stagnant house prices encouraging home owners to renovate rather than upgrade to a new home," Mr Bidwell said.

"Kitchens and bathrooms are likely to remain popular renovation options as they add value and make homes more liveable."

In 2011-12 there were 48,459 renovations above the insurable value of $3,300, at an average cost of around $37,500.While new construction fluctuated in recent years, the renovation sector held up.

Mr Bidwell said he expected the renovation sector to improve in line with employment growth and rising household income.

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