Kitchen renovations are costing nearly half the price of an entire home in some suburbs, with owners of cheaper rural properties most at risk of bill shock.
Demand for builders in regional areas is still high, despite the coronavirus pandemic crippling the economy, meaning home renovations are still costly.
Property owners living a long way from a major capital city are more likely to pay a lot more for a new kitchen, bathroom or extension with competition fiercer for tradies in regional areas.
Then there’s the cost of transporting materials, especially those hard-to-find finishes.
A house at Broken Hill in the far west of New South Wales is on the market for $110,000 – a tenth of what a home with a backyard would typically cost in Sydney.
But a new medium-sized kitchen would cost $44,700 based on mid-range quality finishes and the re-positioning of the kitchen sink above a concrete floor, the newly released Suncorp Renovation Calculator showed.
That cost would rise to $62,200 for prestige finishes such as marble benchtops and flooring – a whopping 57 per cent of the purchase price.
By comparison, replacing a similarly-sized old kitchen in a house at Merrylands in Sydney’s west would cost $35,000 for mid-range quality materials and $48,700 for one with prestige fittings.
Even a more expensive ensemble would only cost 6.2 per cent of the home’s $780,000 asking price, itself a level well below Sydney’s median price of $1million, going by CoreLogic data.
On Brisbane’s south side, replacing an old kitchen at Moorooka would most likely cost $33,200 for mid-range quality finishes and $46,900 for prestige fittings.
A more upmarket kitchen would cost 7.5 per cent of the purchase price in a suburb with a median price of $626,634.
In Melbourne, installing a new kitchen at Keilor East in the city’s north-west would cost $34,800 for quality finishes and $48,500 for prestige fittings in a suburb with a median price of $787,519.
In Perth, a quality kitchen would typically cost $34,400 to install in a $560,000 house.
The price of a new kitchen is similar in metropolitan suburbs and regional centres with least 30,000 people that are near a major highway.
Nonetheless, a $36,300 kitchen at Warrnambool in western Victoria still costs ten per cent of a $360,000 house.
Residential construction work done fell by 12.1 per cent in the year to June – the biggest annual decline in 19 years, Australian Bureau of Statistics data showed.
CommSec senior economist Ryan Felsman said the closure of Australia’s national border in March had reduced demand for new homes.
‘During the pandemic, some building and construction projects have been delayed or cancelled as businesses consolidate their operations and conserve cash,’ he said.
‘The closure of Australia’s international borders has adversely impacted demand for new residential projects.’
Sydney and Melbourne, were more dependent on immigration for economic activity than more more remote regional areas, which means home owners in bigger cities have a better chance of haggling down the price of a new kitchen or bathroom.