Despite the increase in shipping costs, scarcity of raw materials, and sluggish growth in overall consumer spending, one glimmer of hope remains: home improvement businesses. The continuous growth in profits at Ultra Decking and other home improvement companies is indicative of this.
More specifically, home improvement spending across the UK has been booming at about twice the level of the entirety of the retail industry. Let’s look at why the home improvement industry continues to thrive despite the rise in shipping costs.
The reality that family members are stuck at home, around each other, at the same time, clearly influences the choice to renovate or rebuild. As a result, distinct work and learning spaces are required.
However, the increase in remodelling projects isn’t solely due to repurposing a guest room or basement into a workspace. According to Houzz, a digital remodelling site, demand for bathroom and kitchen upgrades increased by 40%. Kitchens have become the heart of family dynamics as more people prepare a meal and dine at home.
If a full or partial remodelling is out of budget, purchasing new furnishings has become another option for home makeovers. According to Business Insider, sales volumes of furniture and interior furnishings increased by 158 per cent in September 2020, compared to March 2020, when the pandemic was just starting to take hold.
Of course, the key concern is where the money will come from to fund the renovation projects? Several things are at work.
For example, consumers have been cutting costs by not dining out, buying stuff, or taking vacations. As a result, many families concluded that for now, they’d rather add more value to their homes than lose them.
Home improvements are also fueled by historically low mortgage rates and the comparatively significant equity many homeowners already have. Although the economy was in a slump for much of last year, property prices are rising in many areas of the UK.
As a result, homeowners have decided to invest much more money in their homes by renovating them.
It’s worth noting that while house remodelling and maintenance businesses have thrived, the industry that plans, constructs, builds, and sells new homes has taken a hit.
According to Ultradecking UK, the latest study shows that 78 percent of building contractors experienced delays in the project or cancellations due to the high shipping costs.
The most common explanation, cited by 42% of respondents, was a non – availability of building supplies, tools, or high cost of components.
As a result, while one industry fails, another thrives. It makes sense that if the new house supply is low, families that would normally buy a new home will recognise that they will be unable to do so for the time being. As a result, they’re hanging around and spending money on renovations.
Even if families opt to relocate after the lockdown, they will be doing so in a resale home that will most likely require some repairs.
The house improvement industry in the United Kingdom is projected to be worth £26 billion. Homeowners have invested a minimum of £295 billion on upgrades such as kitchen remodelling and composite deck installation only in the last four years. Given how much these improvements can increase property values, this is unsurprising – experts estimate that upgrading your home can add up to £35,000 to its market value.
What rises must fall: shipping costs can’t keep rising indefinitely.
Furthermore, loan rates cannot remain at zero forever, making home equity loans less appealing.
As mortgage rates rise, housing sales that had been on a stratospheric ascent will decrease, and prices will level out. While this is wonderful news for the general market, does this imply that the money spent on restorations, remodelling, and upgrades during this period was a waste?
Not in the least. Repairs and improvements increase the quality and functionality of the home as well as the lives of the people who live there. There can’t be a monetary value ascribed to that. For the foreseeable future, home remodelling and maintenance businesses can take advantage of these opportunities and possibly seek finance to grow their operations.
While no one knows when the situation will improve, all businesses, including builders, can stay afloat by leveraging unanticipated trends.
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