IBISWorld has forecasted that while low consumer sentiment will see home buyers hold back, Australia’s DIY and renovation sector will experience growth, posting 15 per cent over the next five years to be worth $25.5 billion by 2016-17.
IBISWorld genera manager Karen Dobie said the trend is linked to the increase in residential housing prices, which is due to the housing shortage, easier access to finance and government incentives, amongst other factors.
“Many homeowners have been dissuaded from entering the property market due to the increasing cost of buying a home and the associated costs of moving. Consequently, these consumers have turned to DIY and renovating to add value to their homes, save and squeeze their budgets further,” she said.
Other drivers identified by IBISWorld include declining consumer confidence, the DIY cyclical trend and the popularity of home renovation programs such as The Block.
The big winners from Australia’s DIY and home renovation drive is hardware retailers which account for 52 per cent of all related spending, followed by professional help (34 per cent), garden supplies (11 per cent) and plant nurseries (3 per cent).
“Australia’s hardware industry will be worth $11.6 billion in 2011-12, and is expected to grow by 23 per cent over the next five years to reach $14.2 billion in 2016-17,” Dobie said, flagging Bunnings as the leading player in the sector, accounting for 20 per cent of hardware retailing market share.
“Bunnings is planning to develop 26 new stores this year, and next month Woolworths’ first big-box store, Masters, is pegged to open in Melbourne’s western suburbs – currently the fastest growing region in Australia. Woolworths also plans to open 30 big-box stores per year over the next four years across the nation, and the company has committed to 150 development sites by the end of 2015.”
Flooring retailers – which generate 95 per cent of revenue from households – are also expected to benefit from growth in DIY, with home renovation projects boosting sales of floor coverings and carpets.