The more home improvement shows there are on Australian television, the less money is being borrowed to pay for renovations.
Indeed, you could almost make the case that there’s an inverse relationship between the two.
This chart from Commsec tells the story.
The dollar value of loans to upgrade Australian homes fell to the lowest level on record in January.
“Home renovating reality TV shows beware!,” said Ryan Felsman, Senior Economist at Commsec.
“The value of lending approvals for home alterations and additions have fallen to the lowest level since records began in July 2002 due to a combination of tightening lending standards, slower home loan approvals due greater scrutiny of household balance sheets, falling property prices and a desire to deleverage.”
On the latter factor — paying down debt — the RBA said that monthly mortgage repayments, based on offset account balances, were around 2.5 years ahead of schedule on average in early 2018.
While that doesn’t reflect the circumstances of individuals, it suggests many Australians are choosing to pay down their mortgage rather than spruce up their current digs.
Although borrowing to renovate is currently on the nose, the total value of renovation work approved in Australia stood at $8.37 billion in the 12 months to January, according to the ABS, just off the record level of $8.5 billion set in the year to September last year.
Clearly, Australians are still intending to improve their homes. They’re just not borrowing as much to do it.
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