With the housing price cycle past its peak, property owners are scaling down their home extension plans. Home values are remaining virtually unaffected post-improvements and as such owners are choosing to pay down debt rather than withdraw equity.

A report by the Housing Industry Association shows that major renovation activity fell 4.1 per cent to $797 million in the September quarter of 2005. The total renovations market reached a peak in the December 2003 quarter at $1.3 billion. Despite this weak result, renovation activity still remains historically high due to the restricted supply of new land within Australian urban areas and the high costs of moving.

This trend is generally seen in those planning to remain in their current home indefinitely. Council approvals have provided fuel for the renovation industry, with the value of council approved alterations and additions remaining steady over the past year.

10,375 households conducted major home renovations in the quarter leading up to September, with the average job costing $76,856. This is a sharp decrease from the market peak in 2003, when the average renovation reached $90,000.

The most popular type of major renovation was a ground floor extension worth $112,490. Kitchen renovations averaged $22,650, while second story extensions averaged $123,244.

The average amount spent on renovations increased for ground and second story extensions, kitchens, bathrooms, repairs and maintenance. The average spent decreased for roofing, garages/carports and external work.

Major renovation expenditure increased by 5.7 per cent in Tasmania, and 1.3 per cent in Western Australia. However expenditure decreased by 21.4 per cent in the Australian Capital Territory.