Time for Improvement

Sunday Business Post - Property Section Cover Story - 24 Feb 2008
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A slower property market and better availability of tradesmen should boost the home improvement market this year, writes Dermot Corrigan.

If the past few years have seen many Irish people trading up and purchasing a newer, roomier and more comfortable property, then 2008 looks set to a see a trend towards home owners improving their current homes.

The market for remodelling, maintenance and improvement (RMI) of Irish homes is expected to grow considerably in 2008, according to Lisney economist John McCartney. ‘‘The RMI industry will take a huge upturn,” he said.

‘‘Currently RMI, including extensions, attic conversions and more minor repairs, makes up approximately 13 per cent of construction output. We estimate that between 2006 and 2008 we will see a 30 per cent growth in that side of the industry.”

McCartney said all the data points to a major increase in the number of Irish people extending or renovating their homes this year.

‘‘Central Statistics Office figures statistics show that the number of planning permissions granted for extensions was up by 12 per cent in the first three quarters of 2007 compared to the same period one year earlier,” he said. ‘‘Also, the vast majority of housing extensions are smaller than 40 square metres and therefore do not require planning consent.”

Ted Laverty, managing director of onlinetradesmen.com, agreed with McCartney’s analysis. ‘‘We expect the RMI sector to grow in 2008,” he said. ‘‘Early indicators show a 27 per cent increase, up to more than 4,000, in the home improvement projects being submitted through Onlinetradesmen.com from the same period in January 2007.”

McCartney said many people who had held onto their SSIA cash would splash it this year. ‘‘The SSIA money has been a big factor,” he said.

‘‘A survey by the Irish Financial Services Regulatory Authority in October 2005 found that 13 per cent of SSIA holders planned to spend their maturing lump sums on home improvements. Some of it has been spent already, but it is clear that a lot of it is still to be discharged into the economy.”

For the last few years it has been difficult to find workmen to take on smaller renovation projects, as construction professionals were attracted to more lucrative work building new homes. But such skilled labour should be easier to source in 2008.




With new house completions expected to drop from approximately 88,000 in 2006 to less than 50,000 this year, a wave of construction personnel should be available to fit that kitchen or convert that attic, according to McCartney.

‘‘There is likely to be a loss of between 60,000 and 70,000 jobs in new home building,” he said.

‘‘Part of the problem over the last few years is that people who wanted to do projects at home have just not been able to get the workers, because they have been tied up building new homes. Small contractors who would build an extension for you were like gold dust, so projects were put on hold due to the lack of available labour. Now people who have been laid off from the big building sites are going to be flooding into the market for RMI-type work.”

This means the cost of getting the workmen in will inevitably come down, according to McCartney.

‘‘There is a supply and demand effect here, and the availability of all this extra labour will bring down the price of work,” he said. ‘‘It will be more affordable and customers will not have to wait as long to get builders. The level of service you will get will probably improve as well.”

Laverty said the average total cost of an RMI project organised via his website had fallen over the past 18 months. ‘‘The averages spend for home improvement projects through Onlinetradesmen.com so far for 2008 is €13,747,” he said. ‘‘This represents a drop of seven per cent from the 2006 figure of €14,752.”

McCartney said further competition between contractors battling for RMI projects would see costs fall further as 2008 progresses. ‘‘Anecdotally, some of the figures people were getting quoted were quite high,” he said.

‘‘I think we will see the return of a bit of sanity to the market this year. Data from August 2007 showed employment in small construction firms had grown quite significantly, that will make it a more competitive market.”

Laverty warned against employing non-specialists for complex projects. ‘‘Low-cost operators will often sacrifice the quality of their work and the materials they use in the interest of winning jobs,” he said.

Elaine McHale, an interior design consultant at homeinteriors.ie, said many of her clients were looking at rearranging the internal layout of their properties to give a cleaner, more spacious feel.

‘‘There is an increase in the number of refurbishments and a move towards open-plan designs, rather than new builds,” she said. ‘‘People are knocking rooms together, creating more space and bringing in more light. They are going for a more sophisticated look with less clutter.”

McHale said people who had enjoyed home improvement and makeover television shows wanted to take greater control of their home improvement projects.

‘‘People want to be more involved in the whole design process,” she said. ‘‘There are so many TV programmes out there now about interior design that people have a firm idea of what they want. They are going out and buying the materials themselves, but they still want to be guided.”

The kitchen is the number one target for improvement, according to McHale. ‘‘Kitchens are now competing with living rooms in terms of being the focal point of the house,” she said. ‘‘It is often the most important room in the home.”

Rosie Shortt, managing director of Houseworks, said her customers were choosing top of the range modern kitchens.

‘‘The Shaker style will always be popular, but people are going for the modern, streamlined contemporary kitchens which offer a cleaner look,” she said.

‘‘They like the sense of space and when they come home from work they want to be in a clean, spacious area. We are now selling what we call a new classic kitchen in the Siematic Beaux Arts range; it’s an eclectic mix of stainless steel, timber, granite and lacquer doors.”

‘‘People are spending from €40,000 up on their kitchen, including appliances and worktops, and it’s quite common for them to sp end ove r €80,000.The average spend is going up, and people are buying quality. . . “

Bedrooms are also a popular focus for RMI investment according to Richard Fagan, retail sales manager with McNally Living.

‘‘People are spending a huge amount of money now on their bedrooms,” said Fagan. ‘‘The market has moved towards a very streamlined, sleek-look. People are investing a lot in lighting, flooring and specific storage systems for different clothes such as shirts, ties and shoes. For an entire master bedroom you are looking at between €7,000 and €18,000.”

Incorporating a home office into the living space is an increasingly common aim for Irish home improvers, Fagan said. ‘‘People are putting home office pieces into their open plan living areas,” he said.

‘‘In our showroom we have set up a neat shelving system with a built-in desk within the living area, and a lot of people are falling in love with that. Customers are spending up to €20,000 on a home office fit-out.”

External RMI projects are also expected to be big this year. Award-winning gardener Paul Martin said many of his clients were now looking to match up the inside and outside of their homes.

‘‘People are looking to bring the inside out and are very conscious of wanting to move from indoor to outdoor living,” he said.

‘‘There is a trend for paving materials outside to match the inside. If there is a contemporary extension, maybe done in a light-colour porcelain or limestone, they will try and match a similar colour outside. If they have a small garden, the room inside can seem 30 per cent bigger. The price of a normal project would be around €50,000.”

Martin said demand for high-end conservatories was also increasing. ‘‘I know from Marston & Langinger, who would be one of the best conservatory firms around, that their sales are up,” he said.

‘‘There is a trend towards better quality - people are becoming smarter with their money.” A more prosaic reason for the increase in RMI projects this year is the incoming Building Energy Rating (BER) certification framework. New homes will be certified from July 1 this year, but secondhand properties going on the market will need a certificate from the start of 2009.

‘‘Many property owner are still unaware that all secondhand homes put up for sale or rental will need a BER certificate,” said Ted Laverty.

‘‘This will fuel the need for insulation services, double glazing and the updating of heating systems to more efficient solutions.”

McCartney said BER ratings would definitely affect property prices. ‘‘People who want to sell their properties and achieve a good price on the market will be put at a disadvantage by a sub-standard energy report,” he said. ‘‘We think there will be big business for RMI providers in that area this year.”