Road to recovery for renovations

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The latest Housing Industry Association (HIA) figures reveal that major renovation activity recovered in the March 2006 quarter, making up all of the ground lost towards the end of 2005. HIA's quarterly Renovations Monitor report shows that major renovation activity (classified as jobs carried out by a licensed builders and contractors) increased by 13% in the March quarter to $782m. HIA's chief economist, Harley Dale, said that the early 2006 result was encouraging ahead of a likely rate-rise induced softening mid year. "Relatively stable house prices and continuing strong labour markets are delivering reasonably healthy levels of expenditure on major renovations, although activity continues to be down on the peak levels of 2002 and 2003," Dale said. "The interest rate rise in May and sustained higher fuel costs will take some of the shine off renovations, as well as the new home market, in the June quarter, and overall spending on renovations will be lower this year than last," he added. "However, the cost of new housing continues to creep higher as governments fail to address the substantial cost burden they themselves are imposing. This environment will maintain a healthier renovations market relative to residential construction throughout the year." Major renovation expenditure increased throughout much of Australia in the March quarter, with the strongest increases occurring in Western Australia (23%), South Australia (16.3%), and Queensland (15%). New South Wales saw an increase of 12.9% and Victoria an increase of 13%.

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