Home builders that renovate may do better than new home construction companies

As new home project builders trim back their operations, and developers go into bankruptcy, someother builders have their order books full because they have made a trend their friend.

Yes, we will always need new home developments, but many construction companies miss the point that new homes sales spending is being eclipsed by spending on renovating existing home stock, and that this accelerating trend grows stronger everytime a new home is built.

People move for many reasons, such as better, bigger home with the latest fitout. Many people don’t move because they are happy in their current location, and the land size is typically better. So the perfect solution for them is extending the home, and refitting the kitchen and bathrooms.

Typical land lot sizes are shrinking, and getting steeper, and more out of the way, so when you put on to this the softening of established home prices, remodelling your home might be a better option.

People with money and in sheltered industries immune from the effects of the downturn caused by the financial crisis are still spending and  renovations and extensions to these people is attractive for many reasons, stability, location, land size, land slope and government charges and stamp duties and the costs of buying and selling amongst them.

And with more builders looking for work, the cost of renovation may also fall. 

A lot of people are taking up renovations because they’re not paying the stamp duty and everything else that comes along with buying a new house

So far he hasn’t been too hard hit by the crisis. He said he had been “doing renovations for the last 12 years, and there’s always been work about”. 

“The new houses may slow down (in a recession) but the renovations keep going,” he said. 

Mr Horton tends to work for “people with money” and in his view, “there’s a lot of people around with money”. “The rich are still rich; it’s the young people that struggle,” he said. 

Louise Houston, a director of the roof conversions firm, was not not so sure things would remain rosy. She said the business had lost 20 per cent of its client base, many of whom had become victims of the downturn in the finance industry. 

Builders hope the Government’s stimulus package, with its plan to build 20,000 new public, community and Defence homes, will help kick things along again.