With high energy bills, inflation and interest rates leaving consumers with far less disposable income, the cost-of-living crisis is having a major impact on the home renovation industry.

 

In fact, an alarming 44% of homeowners are worried they won’t have enough money to complete home renovations because of it1. And with this growing trend exacerbating the further issue of the rising cost of highly skilled renovators, it stands to reason that something has to give. As society has changed, so has the home renovation industry.

 

Here, Will Frankling, the founder of the innovative home improvement franchise Kitchen Makeovers, delves into how the industry is changing and what the future holds for home renovations.

 

Feeling the pinch

 

The rising cost of materials, labour shortages and the other various implications of the cost-of-living crisis have all had a serious impact on the home renovation industry. On average, tradespeople increased their prices by 16% in 20221, with the trend likely to continue its steep upward trajectory throughout the rest of 2023. And with demand within the industry continuing to increase, these extra costs have been passed on to the customer. In 2022, homeowners spent just over £25k on their renovation projects, but in 2023, they’re budgeting almost £30k for the same work1.

 

So, to cope with budget constraints, consumers are increasingly seeking cost-effective solutions. A recent study showed that 32% of people have a current home improvement or maintenance task that requires the help of a skilled trades professional. However, 52% do not have the money to complete this, while 48% state they had the money but were reluctant to spend it due to the current economic climate2.

 

Businesses have had to adapt to the changing market. Many have shifted to online platforms to minimise overheads, while others have championed partial over full renovations to attract budget-conscious customers.

 

The impact on the property market

 

With interest rates being raised to try and curb inflation, the property market has also begun to suffer – UK house prices dropped at their fastest annual rate in 14 years in July. The average price of a home in the UK is £260,828, which is about £13,000 below a peak in August last year.3 So, rather than moving up the property ladder, many homeowners are now looking at renovating their existing properties. Impressively, in 2022, homeowners saved on average £5,412 by doing ‘part updates’ instead of complete refurbishments1.

 

Full or part renovations have become a popular way of either adding value to a property or making it more desirable when trying to sell. Whilst there is uncertainty in the property market, an increasing number of people are choosing part updates as a way of improving homes.

 

The quest for sustainability

 

Sustainability has been the buzzword in home renovations in recent years, and making choices that are environmentally friendly is a priority for more than half of renovating homeowners (58%). Because of this, the vast majority of homeowners incorporate sustainable features during a kitchen renovation (94%), with the most frequently cited reason for incorporating sustainable options being “long-run cost-effectiveness” (80%)4.

 

In 2022, 29% of homeowners used natural or renewable materials in their home improvements1. This trend looks set to continue as a younger, greener generation of customers begin to renovate their homes. Despite the rising costs of renovations, consumers will still actively look for environmentally friendly solutions. Right from when we founded Kitchen Makeovers, we recognised that there was a growing demand for sustainably sourced products, and we made sure we incorporated them into our operations. By offering cost-effective and sustainable products, we’ve managed to meet this growing demand in the market.

 

Despite the cost-of-living crisis, the latest data shows the UK hardware and home improvement market size is estimated to be worth £14.5 billion, having increased by 10.5% between 2019 and 20225. Far from contracting, the industry is undergoing a period of transformative adaptation, and businesses that can meet these shifting needs are poised for success.

 

1 (RATED PEOPLE HOME IMPROVEMENT TRENDS REPORT 2023)

2 (Help me Fix survey)

3 (UK house prices fall at sharpest rate for 14 years, says Nationwide, BBC, 2023)

4 (Houzz UK Kitchen Trends)

5 (Help me Fix survey)