A few weeks ago, we speculated on the growth of dollars spent by Canadians and Manitobans on renovation projects. More numbers and trends have come to light since then, so I thought I would share this information.
Renovation spending in 2015 only increased by one per cent across Canada, albeit to a very impressive $70.1 billion. That number is expected to increase to $71.4 billion in 2016 and $73.2 billion in 2017. Those increases of over two per cent are more in line with the previous two years.
To put into perspective how significant a number $70 billion is, it represents an average of $5,000 per housing unit across all of Canada in one year. That includes owned and rented units, and those that had work done and those that didn’t.
Renovations represented 58 per cent of the total residential construction spending in 2015. Of that, the largest share was for discretionary upgrades such as alterations and improvements. Necessary repair to keep the housing stock in functional working order only accounted for about 25 per cent of spending.
Interestingly enough, only about 25 per cent of the growth in housing stock unit value can be traced back to renovations. In other words, those who had renovation work done on their house primarily did so for personal enjoyment and lifestyle enhancement rather than financial payback.
Taking a quick look across the country, we can see how and where renovation dollars are being spent. To no one’s surprise, British Columbia is experiencing the highest growth rate in renovation spending. This is in large part because of the fast-rising increase in home sale values.
Alberta is a bit of a mixed bag. On one hand, with the economy still in a downswing, discretionary spending has declined considerably. However, in light of the recent Fort McMurray fires, there will be considerable renovation and rebuilding work to be done.
Ontario represents 40 per cent of Canada’s renovation spending and is expected to post above average growth rates. Similarly, Quebec is the second largest and will continue to be strong.
Atlantic Canada has been flat for a number of years and, although modest gains are being forecast, it will still be relatively slight.
On the prairies, Manitoba continues to outpace Saskatchewan in renovation spending. This trend will continue as Manitoba outperforms the national average.
As a point of interest, Atlantic Canada spends the highest percentage of renovation dollars on necessary repairs. Manitoba and Saskatchewan spend the least, with their spending concentrated on alterations and improvements. Given we have some of the oldest housing stock in the country, that only reinforces the message we build the best new homes given they require the least amount of repair.
Mike Moore is president of the Manitoba Home Builders’ Association.
