The latest edition of the Altus Group Housing Report stated that residential renovation spending in Canada reached an estimated $77.7 billion in 2017, representing a 4.2% year-over-year increase.
This rate outstripped the pace of GDP growth in the same time frame, which was pegged at 3%. Renovations also accounted for 57% of all residential construction spending in 2017, compared to the 43% (an estimated $58.1 billion) allotted to new dwellings.
An estimated 1 in 16 homes needed significant renovation work during that year. Fully 3 out of 4 renovation dollars (a total of around $59.1 billion) were spent on upgrades, which include alterations, improvements, and conversions. The rest (around $18.6 billion) went to repairs.
HELOCs (home equity lines of credit) were found to be a major source of renovation funding, the report added.
“Altus Group estimates suggest at least $17 billion of new borrowing was done by Canadian homeowners for the purposes of renovations in 2017. Secured financing – using products such as HELOCs or refinancing a mortgage to a larger amount – accounted for about half of the dollar borrowed.”
Seniors were among the leading borrowers.
“Given the need for home equity to borrow against, about two-thirds of the total borrowing with HELOCs for renovations was done by homeowners aged 50 or older – with those aged 65 or older accounted for about one-quarter of the overall total.”
The report pointed at strong home sales in 2016 and early 2017 as the chief factors that impelled renovation spending last year. However, this might be changing.
“More subdued home sales in general since Spring 2017, combined with higher costs for financed renovation work as interest rates move up, point to slower growth in home renovation spending at the Canada-wide level this year and next.”