The home renovation market is facing a dip in the market as a lack of labour and soaring materials prices hit the UK. This dip in the market has been noted by the Barbour Home Improvement Report, displaying the lowest home renovation stats since 2020. This is despite signs that demand for renovations has not significantly decreased. 

According to the report the “latest data reveal the exceptional impact on the home-improvement market created by an extraordinary series of economic and social disruptions. But further disruption is on the horizon as Britain’s housing and the wider built environment is forced to adapt to net zero, an ageing population, and increasing levels of home working. There will be winners and losers.” 

While one assumption could be that homeowners are not eager to participate in the market or view renovation as less important than prior years, there is reason to believe that that is not the case. As the Rated People Home Improvement Trends Report outlines, demand is actually high but other extenuating factors are causing difficulties. 

Among these factors, is that homeowners do not feel that they will be able to pay for the full service despite their willingness to renovate their homes. One may attribute this solely to declining wages but many reports also show that disposable income has mildly increased or stayed the same. 

In contrast, the expenses for home improvement materials and services has increased significantly. Skilled labour in the industry is hard to come by as the population is ageing in the UK and skilled workers are set to decrease. Businesses are also having to pay increasing costs as materials shortages hit the world. 

Many wooden materials, oils, and agricultural products needed to produce home renovation goods have suffered supply disruptions due to events like the war in Ukraine. Similarly, the cost of living crisis has made homeowners reluctant to renovate as bills stack up. 

The issue does appear to lean more towards labour supply, since adjacent industries have seen a rise in consumer interest. DIY home improvement has increased in the past years and studies have increasingly shown the willingness to service their homes. There are many home improvements that the average household has been delaying. 

Moreover, types of renovation where prices and labour are less pronounced have been soaring in consumer interest. While the cost of installing central heating in 2024 can be fairly high, a number of government grants and incentives have allowed for homeowners to improve their homes with boilers and even more expensive technologies like heat pumps. 

The most popular forms of renovation are shown to installing renewables and energy systems like solar panels, which matches the rise in applications. While various grants have made this easier, these are also changes that make the cost of living crisis easier to bear, so they seem to be a logical conclusion for many homeowners. 

Conversely, services for landscaping, timber, and joinery have decreased in sales in the past years. These may be seen as either less important or easier to do without the aid of a professional. Many may be saving expenses by engaging in these projects themselves or simply deem the cost of the average service provider too high. 

Difficult tasks and comparative essential home improvements like plumbing, heating, and kitchen work have been seen a growth in sales. These are far more price inelastic than other home renovation duties and are less likely to be put off till later, so it’s no surprise that they perform better in the market. 

There are sectors of the market that are still staying strong and are seeing growth in certain segments. Accodirng to the Rated People report, many homeowners who do have the funds are seeking to improve their homes significantly as an alternative to moving to a new home. Many of these consumers buy up a “fixer-upper” and renovate it into their ideal home rather than buying one ready-made. These are power users in the renovation industry. 

Similarly, the sustainability update is becoming more popular. Many consumers are replacing G-rated boilers, installing heat pumps, or adding solar panels with the help of government incentives or due to their own environmental concerns. Another reason for these updates is that many less efficient heating and electrical systems cost more in annual expenses. 

Insulation grants like the ECO4 scheme have also made insulation more affordable and popular, although this scheme relegates itself to low-income households.  

The decrease in home renovation is by no means a uniform trend across all sectors of the industry or across all customer segments. With many complex macroeconomic reasons for the overall dip, there are also signs that it might improve in the future once materials prices recover from crisis levels and demand for labour in the industry increases. 

Since demand does exist, there are a number of ways prices could fall to meet it and allow for a recovery.