All major states record growth in renovation lending, even as rising fuel prices threaten to lift materials and labour costs
Demand for renovation loans rose 16% year on year to 30 April, according to new data from NAB, with growth recorded across all major states despite emerging signs that building costs could increase again.
Queensland led state-level growth at 25%, followed by Western Australia at 17.9%, South Australia at 15%, Victoria at 10.8%, and New South Wales at 10.7%.
NAB economists noted that while construction and labour costs have eased from recent peaks, rising global fuel prices could flow through to materials and transport, placing renewed upward pressure on renovation budgets.
"We're still seeing demand for renovations, with lending up 15% in the past month alone, but the risk is costs could begin creeping higher again as fuel prices flow through to building materials and labour," said Denton Pugh (pictured right), executive home lending at NAB.
"We know many Australians are renovating to make their homes more liveable, whether that's creating space for a growing family, enabling hybrid work, or improving energy efficiency. Renovations remain a great way to add value, but in the current environment it's important to plan ahead, build in buffers and stay flexible as conditions change. Simple steps like locking in quotes early and carefully timing your build can make a real difference to the final cost."
Stephen Reddish, owner at Senmak Construction, said demand for renovations and extensions remained strong, with many homeowners opting to improve their existing properties rather than relocate. "Our pipeline is full and enquiry levels remain high," he said.
"While costs have stabilised compared to previous years, we're starting to see some pressure emerge in areas like fuel, freight and deliveries, which is flowing through to materials such as steel, concrete and PVC.
"I'd encourage renovators to lock in fixed prices where possible and build in a provisional allowance, particularly for items that could move. It's not all doom and gloom. With good planning, clear pricing and the right advice early, homeowners can manage costs and avoid surprises."
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