Kitchens and Bathrooms Report

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1 HIA GWA Kitchens & Bathrooms Past Growth and Future Prospects

2 Housing Industry Association Kitchens and Bathrooms Report Past Growth and Future Prospects April 2017 HIA Economics 79 Constitution Avenue CAMPBELL ACT Cover photo courtesy GWA Bathrooms & Kitchens Disclaimer: This publication is produced by HIA Economics based on information available at the time of publishing. All opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. Neither HIA nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report. Confidential Information: This report is confidential to the addressee. It may not be copied or transmitted in whole or in part in any form, including by photocopying, facsimile, scanning P1 HIA or by GWA manual KITCHENS or electronic AND means. BATHROOMS Multiple REPORT copies can - PAST be supplied GROWTH by arrangement/for AND FUTURE PROSPECTS an additional charge. Unauthorised copying is a breach of HIA s copyright and may make you liable to pay damages.

3 Contents Economic Backdrop... 7 The Kitchen Industry The Bathroom Industry The Kitchen and Bathroom Industries: Activities, Attitudes, and Averages New South Wales ) Kitchen and Bathroom Installations in New Homes ) Kitchen and Bathroom Renovations Victoria ) Kitchen Installations in New Homes ) Kitchen and Bathroom Renovations Queensland ) Kitchen and Bathroom Installations in New Homes ) Kitchen and Bathroom Renovations South Australia ) Kitchen and Bathroom Installations in New Homes ) Kitchen and Bathroom Renovations Western Australia ) Kitchen and Bathroom Installations in New Homes ) Kitchen and Bathroom Renovations Tasmania ) Kitchens and Bathroom Installations in New Homes ) Kitchen and Bathroom Renovations Northern Territory ) Kitchen and Bathroom Installations in New Homes ) Kitchen and Bathroom Renovations Australian Capital Territory ) Kitchens and Bathrooms Installations in New Homes ) Kitchen and Bathroom Renovations ) APPENDIX A: Methodology Underlying Kitchen and Bathroom Forecasts ) APPENDIX B: Kitchen and Bathroom Forecasts by state ) APPENDIX C: Additional information regarding survey respondents P2 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

4 List of Figures and Tables Figure 1: GDP Growth... 7 Figure 2: Gross State Product... 8 Figure 3: Unemployment Rates... 8 Figure 4: Inflation and Rental Growth... 9 Figure 5: Population Growth... 9 Figure 6: Building Approvals - Total Figure 7: Building Approvals Houses and Units Figure 8: Median Dwelling Price Capital Cities Figure 9: Investment in Renovations in Australia Figure 10: Renovations Investment by State Figure 11: Estimated Number of Houses out to Figure 12: Trade Availability of Ceramic Tiler s, Australia Figure 13: Trade Availability of Electricians, Australia Figure 14: Trade Availability of Joiners, Australia Figure 15: Trade Availability of Plumbers, Australia Figure 16: Number of Kitchens Installed in New Homes, Australia Figure 17: Notional Demand for Kitchen Renovations, Australia Figure 18: Number of Bathrooms Installed in New Homes, Australia Figure 19: Notional Demand for Bathroom Renovations, Australia Figure 20: Kitchen jobs engaged by: Figure 21: Number of kitchen jobs completed in Figure 22: Expectations for activity levels over the next 12 months Figure 23: Proportion of jobs involving installation of a kitchen in a new home Figure 24: Time to install a kitchen in a new home Figure 25: Average value of kitchen installed in new home Figure 26: More expensive to renovate or install a kitchen in a new home Figure 27: Average age of kitchens Figure 28: Most common type of renovations job done for kitchens Figure 29: Size of kitchens Figure 30: Time it takes to install a kitchen renovation Figure 31: Extent of material specification Figure 32: Average value of kitchen renovation Figure 33: Jobs that complement kitchen and bathroom work Figure 34: Sources of kitchen products Figure 35: Why the preference for Domestic Figure 36: Why the preference - Imported Figure 37: Domestic or Imported Product use Figure 38: Source of Kitchen Components Figure 39: Use of domestically produced goods Figure 40: Bathroom jobs engaged by: Figure 41: Number of bathrooms completed in Figure 42: Expectations for activity levels over the next 12 months Figure 43: Proportion of jobs involving installation of bathrooms in new homes Figure 44: Time to install a bathroom in a new home Figure 45: Average value bathroom installed Figure 46: Frequency of updating a bathroom Figure 47: Most common bathroom jobs Figure 48: Bathroom size Figure 49: Time to complete a bathroom renovation P3 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

5 Figure 50: Average spend on bathroom renovation Figure 51: Number of bathrooms Figure 52: Cost comparison between bathrooms for new homes and renovations Figure 53: Extent of material specification Figure 54: Use of domestically produced and imported goods Figure 55: origins of products used in bathrooms Figure 56: Change in use of domestically produced goods Figure 57: Basis of supply and distribution Figure 58: Origin of products supplied and distributed Figure 59: Three year supply and distribution prediction Figure 60: Location of manufacturing Figure 61: Number of Kitchens Installed in New Homes in New South Wales Figure 62: Number of Bathrooms Installed in New Homes, New South Wales Figure 63: Notional Demand for Kitchen and Bathroom Renovations in New South Wales Figure 64: Number of Kitchens Installed in New Homes, Victoria Figure 65: Number of Bathrooms Installed in New Homes, Victoria Figure 66: Notional Demand for Kitchen and Bathroom Renovations, Victoria Figure 67: Number of Kitchens Installed in New Homes, Queensland Figure 68: Number of Bathrooms Installed in New Homes, Queensland Figure 69: Notional Demand for Kitchen and Bathroom Renovations in Queensland Figure 70: Number of Kitchens Installed in New Homes, South Australia Figure 71: Number of Bathrooms Installed in New Homes, South Australia Figure 72: Notional Demand for Kitchen and Bathroom Renovations in South Australia Figure 73: Number of Kitchens Installed in New Homes, Western Australia Figure 74: Number of Bathrooms Installed in New Homes, Western Australia Figure 75: Notional Demand for Kitchen and Bathroom Renovations, Western Australia Figure 76: Number of Kitchens Installed in New Homes, Tasmania Figure 77: Number of Bathrooms Installed in New Homes, Tasmania Figure 78: Notional Demand for Kitchen and Bathroom Renovations, Tasmania Figure 79: Number of Kitchens Installed in New Homes, Northern Territory Figure 80: Number of Bathrooms Installed in New Homes, Northern Territory Figure 81: Notional Demand for Kitchen and Bathroom Renovations, NT Figure 82: Number of Kitchens Installed in New Homes, ACT Figure 83: Number of Bathrooms Installed in New Homes, ACT Figure 84: Notional Demand for Kitchen and Bathroom Renovations, ACT Figure 85: Value of Kitchens Installed in New Homes in New South Wales Figure 86: Value of Bathrooms Installed in New Homes, New South Wales Figure 87: Value of Kitchens Installed in New Homes, Victoria Figure 88: Value of Bathrooms Installed in New Homes, Victoria Figure 89: Value of Kitchens Installed in New Homes, Queensland Figure 90: Value of Bathrooms Installed in New Homes, Queensland Figure 91: Value of Kitchens Installed in New Homes, South Australia Figure 92: Value of Bathrooms Installed in New Homes, South Australia Figure 93: Value of Kitchens Installed in New Homes, Western Australia Figure 94: Value of Bathrooms Installed in New Homes, Western Australia Figure 95: Value of Kitchens Installed in New Homes, Tasmania Figure 96: Value of Bathrooms Installed in New Homes, Tasmania Figure 97: Value of Kitchens Installed in New Homes, Northern Territory Figure 98: Value of Bathrooms Installed in New Homes, Northern Territory Figure 99: Value of Kitchens Installed in New Homes, ACT P4 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

6 Figure 100: Value of Bathrooms Installed in New Homes, ACT Figure 101: Value of Kitchens Installed in New Homes in Australia Figure 102: Value of Bathrooms Installed in New Homes, Australia Figure 103: Locations of the majority of work? Figure 104: Main activities of business Figure 105: Description of work done by respondents - Kitchens Figure 106: Description of work done by respondents - Bathrooms Figure 107: Description of work done by respondents - kitchens and bathrooms Figure 108: Description of work done by respondents - general building and renovation Figure 109: Description of kitchens and bathroom renovation jobs Figure 110: Description of work done by respondents - materials/products/appliance manufacturing Figure 111: Description of work done by respondents - supply/distribution Figure 112: Range of average dollar value of a kitchen installed in a new home by state Figure 113: Range of average dollar value of a kitchen installed in a renovation by state Figure 114: Range of average dollar value of a bathroom installed in a new home by state Figure 115: Range of average dollar value of a bathroom installed in a renovation by state P5 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

7 OVERVIEW The total number of kitchen installations in new homes is estimated to have increased by 5.9 per cent during the 2015/16 financial year, the fourth consecutive year of increase. In the current financial year, the number of kitchens installed into new homes is projected to decline by 6.9 per cent, but still remain at a very high level. A larger fall of 15.3 per cent is anticipated to occur during 2017/18 with activity forecast to bottom out during 2018/19 when around 173,000 new kitchen installations are expected to occur. Like kitchens, the total number of bathroom installations in new homes has grown for four consecutive years and is estimated to have remained unchanged at about 441,000 during 2015/16. Activity on this side is forecast to decline by 4.6 per cent during, with a reduction of 15.0 per cent anticipated for 2017/18. A further fall of 5.3 per cent during 2018/19 is anticipated to bring activity to a trough of 338,900. Based on notional demand, HIA estimates that there is total pool of around 146,100 potential kitchen renovation jobs in. HIA estimates that in there is a total pool of around 219,600 potential bathroom renovation jobs, based on notional demand. The latest HIA Kitchens and Bathrooms survey found the average value of kitchens installed in new homes to be $20,031, a little lower than the $20,411 average value of kitchens installed as part of renovations. The survey found the average value for bathrooms installed in new homes to be $16,197 compared to the average value for bathrooms installed as part of a renovation at $17,054. The survey found a large majority of kitchen renovations (78 per cent) were performed in homes in the 11 to 20 year age bracket. Of the total, 36 per cent were undertaken in homes in the 11 to 15 year age group. A further 42 per cent of kitchen renovations were performed on homes aged between 16 and 20 years. The HIA Kitchens and Bathrooms survey found a large majority of bathroom renovations (72 per cent) were performed in homes within the 11 to 20 year age bracket. Of the total, 31 per cent were performed on bathrooms in the 11 to 15 year age group. A further 41 per cent of renovations were performed on bathrooms aged between 16 and 20 years. P6 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

8 1995/ / / / / / / / / / / / / / / / / / / / / / /19 Per cent Economic Backdrop Short-term prospects for economic growth have improved in the US given the likelihood of significant fiscal stimulus under the Trump administration. A huge boost in infrastructure investment from China s government has got the economy back on track following difficulties during 2015 and early The Australian dollar s exchange rate has succeeded in remaining fairly low and stable over recent years. Australia s economy grew at an annual rate of 2.4 per cent during the December 2016 quarter. New dwelling investment, exports and activity related to public sector infrastructure projects are the key drivers of growth currently business investment is a weakness. Over the next few years, the economic growth rate is projected to remain around 2.5 per cent. Figure 1: GDP Growth Gross Domestic Product - Australia Long term average 4.0 Forecast Source: ABS ; Access Economics, ACI Year ended June Around the grounds The latest CommSec State of the States report shows that New South Wales and Victoria continue to dominate the state rankings for economic performance. The mining states of Western Australia and the Northern Territory continue to struggle. Its traditional manufacturing structure also means that South Australia faces difficulties. The latest CommSec State of the States report was released during January 2017 and provides an update on the comparative economic performance of the eight states and territories. NSW remains in number one position followed by Victoria in second place and the Australian Capital Territory in third. Their respective performances for new home building activity has played a significant role in propelling both states to the top of the rankings. The other end of the spectrum is dominated by mining-related states. WA is ranked in last position, followed by SA and the NT. The difficulties related to mining project investment are the main source of economic weakness for WA and the NT, while SA s challenges are broader based. The chart below provides a summary of the economic growth projections for each of the eight states and territories. NSW and Victoria are set to remain on a fairly even keel for the next few years. Queensland appears to be the biggest winner with economic growth accelerating significantly over the coming years. Elsewhere, growth prospects look to be much more restrained. P7 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

9 % change Figure 2: Gross State Product Gross State Product (December 2016) - FY2015/16, FY and FY2017/ NSW VIC QLD SA WA TAS NT ACT 2015/ /18 Unemployment has steadied Unemployment looks to have passed its peak and appears to have stabilised at around 5.8 per cent. Outside of Victoria, the pace of employment growth has slowed growth is being driven by part-time rather than full-time jobs. Over the past year, job creation has been strongest in Public Administration & Safety followed by Construction and Education & Training. There is considerable variation from state to state with respect to unemployment ranging from 6.7 per cent in Queensland to 3.5 per cent in the Northern Territory. Figure 3: Unemployment Rates Unemployment Rate by State - February National Unemployment Rate Source: ABS NSW VIC QLD SA WA TAS NT ACT P8 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

10 Sep-2006 Dec-2006 Mar-2007 Jun-2007 Sep-2007 Dec-2007 Mar-2008 Jun-2008 Sep-2008 Dec-2008 Mar-2009 Jun-2009 Sep-2009 Dec-2009 Mar-2010 Jun-2010 Sep-2010 Dec-2010 Mar-2011 Jun-2011 Sep-2011 Dec-2011 Mar-2012 Jun-2012 Sep-2012 Dec-2012 Mar-2013 Jun-2013 Sep-2013 Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014 Mar-2015 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 Sep-2016 $ milions Source: ABS Price pressures are very muted During the December 2016 quarter, the annual rate of headline inflation reached 1.5 per cent; Rental inflation has decelerated significantly and at 0.6 per cent during 2016 is at its lowest since 1994; Figure 4: Inflation and Rental Growth Wage pressures are also very restrained by historic standards an increase of 1.9 per cent occurred over the year to December Inflation and Rental Growth to % 8% 7% 6% 5% 4% 3% 2% 1% 0% Dec-2016 Dec-2015 Dec-2014 Dec-2013 Dec-2012 Dec-2011 Dec-2010 Dec-2009 Dec-2008 Dec-2007 Dec-2006 Dec-2005 Source: ABS Rents Inflation Population growth has steadied out. The pace of population growth has slowed over the last couple of years but appears to have stabilised over the year to September 2016 it rose by 1.5 per cent The volume of net migration from overseas has edged higher in the last few years and still makes a bigger contribution than natural increase; The geographic pattern of population growth around Australia is strongly linked to labour market conditions in each state the fastest rate of population growth is in Victoria (+2.1 per cent) followed by NSW. Figure 5: Population Growth LABOUR COMPONENTS MARKET OF POPULATION CONDITIONS GROWTH - AUS(MOVING ANNUAL TOTAL), 2006 TO , , , , , , , , ,000 50,000 0 Total MAT Natural Increase MAT Net Overseas Migration MAT P9 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

11 Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Number Mult-units lead big decline in approvals represented a year when the buoyant conditions in the new residential construction sector in recent years became a touch less pronounced. The building approvals cycle decelerated slightly relative to the peak in Conditions in 2016 were still very favourable to the residential industry. But despite easing from the peak some 230,813 homes were still approved, in seasonally adjusted terms in the 2016 calendar year. These approval figures were supported by the low lending rates throughout the year, dwelling price growth in key markets, and relatively favourable labour market conditions. There were also constraining factors at play in 2016; the substantial growth in existing property prices in Sydney and Melbourne saw the blanket restrictive lending conditions on investor finance continue; there were controls on moving money overseas imposed in China; there was the lagged effect of lower rates of overseas migration; and issues with the supply and cost of residential land. The consequence was a gradual deceleration in the level of building approvals in the second half of 2016 leading to our conclusion that the building approvals cycle has peaked in Australia. Figure 6: Building Approvals - Total Building Approvals - Australia 23,000 21,000 19,000 17,000 15,000 13,000 11,000 9,000 Source: ABS 8731 Seasonally adjusted Trend During the three months to February 2017, a total of 53,714 new homes were approved for construction, 1.7 per cent higher than the previous three-month period but some 9.3 per cent lower than a year earlier. New dwelling approvals had peaked during the three months to May 2016 and have since fallen back by 12.4 per cent. The multi-unit side of the market has led the decline in total dwelling approvals. There were 25,836 multiunit dwellings approved for construction in the three months to February 2017, a level that is actually 8.0 per cent higher than in the previous three months and 11.2 per cent lower than in the same quarter 12 months earlier. Detached house approvals have been moving lower at a more modest pace. In the three months to February 2017, detached house approvals numbered 27,878, 3.6 per cent lower than in the previous quarter and down by 7.5 per cent from the same quarter 12 months earlier. Our outlook for new home building activity is based on the fact that new dwelling approvals remain at very elevated levels (even though they have retreated from all-time highs) and the pipeline of work in progress is substantial, particularly in terms of medium/high density product. Over the entire 12 month period ended February 2017, detached house approvals totalled 116,169 with 112,922 multi-unit approvals during the same period. The chart below illustrates how multi-unit approvals actually exceeded detached house approvals for a number of months during 2015 and Over the year to February 2017, detached houses accounted for 50.7 per cent of total approvals. P10 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

12 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Number Figure 7: Building Approvals Houses and Units Building Approvals - Australia 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Source: ABS 8731 s.a. Detached Trend - Detached s.a. Multi Trend - Multi House prices a mixed bag Since last year s Kitchens & Bathrooms Report, dwelling prices nationally have increased further. Prices are estimated to have bottomed out during the month of May As at March 2017, they were 49.3 per cent higher. The increase was even larger when confined to detached houses (+51.6 per cent) multi-units have increased a little less since their price trough five years ago (+37.4 per cent). During March 2017, the median dwelling price stood at $585,000 across Australia s eight capital cities. The median detached house was $613,200 and the median unit price $512,200. The strength of dwelling prices over recent years is largely the result of the regime of remarkably low interest rates but also a response to the significant increase in Australia s population over the past decade and the robust state of labour market conditions in some places. Supply side conditions have also played a role in shaping price developments. As described above, new home building rose to unprecedented levels over recent years had this not happened, dwelling price pressures are likely to have been even more acute. One of the most distinctive features of today s housing market is the wide variation between the eight capital cities in terms of price growth. The pace of increase remains strongest in Sydney, where dwelling prices have risen by 18.9 per cent over the year to March and are up 77.3 per cent since the low point in May Dwelling price growth in Melbourne was the second strongest over the year to March 2017 (+15.9 per cent). Price growth has accelerated strongly in Canberra over the past year where dwelling prices are up by 12.8 per cent over the same period with Hobart now in fourth place for price growth (+10.2 per cent). There is a big gap between the four fastest growing capital cities and the rest. After Hobart, Brisbane is in fifth position for annual dwelling price growth (+3.7 per cent) followed by Adelaide in sixth (+3.4 per cent). The mining downturn continues to take its toll on dwelling prices in both Perth and Darwin. Over the year to March 2017, dwelling prices declined by 4.7 per cent in Perth and were down by 4.4 per cent in Darwin. P11 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

13 Dec-1993 Dec-1994 Dec-1995 Dec-1996 Dec-1997 Dec-1998 Dec-1999 Dec-2000 Dec-2001 Dec-2002 Dec-2003 Dec-2004 Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec.2009 Dec-2010 Dec-2011 Dec-2012 Dec-2013 Dec-2014 Dec-2015 Dec-2016 $ million (moving annual total) Source: CoreLogic RP Data Figure 8: Median Dwelling Price Capital Cities Change in home values to March % 20% 18.9% 15.9% 15% 12.8% 10% 10.2% 5% 0% 5.0% 4.2% 3.7% 3.4% 0.0% 1.6% 5.6% 5.1% -5% -4.7% -1.3% -4.4% -3.1% -10% Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra Year-on-Year Quarter Renovations recovery gathers legs The volume of renovations activity increased by 1.9 per cent during the December 2016 quarter, following a 1.1 per cent contraction in the September 2016 quarter. This means that renovations activity has expanded in six of the eight most recent quarters, and 2016 was the third consecutive calendar year of increase for this important part of residential building. However, the pace of growth in renovations activity slowed to 2.7 per cent during 2016 from 4.5 per cent in Overall, renovations activity has expanded by 8.5 per cent since bottoming out during the 2013 calendar year with the volume of activity rising from $30.48 billion to $33.06 billion. The configuration of interest rates, dwelling price growth and economic activity has been favourable from the perspective of renovations activity. However, one factor which has detracted from continued growth in renovations activity is the contraction in the volume of established house transactions. During the June 2016 quarter, the volume of transactions on this side of the market shrank back by 3.9 per cent compared with a year earlier. This is important because prospective sellers sometimes renovate before putting a house on the market. More frequently, the new owners of an established house will engage in renovations work on the home after taking possession. Whenever turnover in the established house market starts to increase again, renovations demand can be expected to benefit significantly. Figure 9: Investment in Renovations in Australia Renovations Investment in Australia - Moving Annual Total 40,000 35,000 30,000 25,000 20,000 15,000 Source: ABS 5206 P12 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

14 P13 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS Official measures of renovations activity tend to fluctuate quite significantly from quarter to quarter the chart below illustrates the changes in renovations activity during the December 2016 quarter across each of the eight states and territories. Compared with the same period a year earlier, the annual rate of renovations market growth was in NSW (+21.8 per cent), followed by the ACT (+22.2 per cent), SA (+9.8 per cent) and the NT (+8.3 per cent). Over the same period, Queensland saw the weakest renovations market conditions (-6.0 per cent) followed by WA (-5.2 per cent). Movement in renovations market activity was quite small over the course of the year in both Victoria (+1.7 per cent) and Tasmania (-1.2 per cent). During the December 2016 quarter itself, SA saw the biggest expansion in renovations activity (+9.4 per cent) followed by NSW (+8.1 per cent). The largest contraction in renovations activity in the December 2016 quarter affected the NT (-12.4 per cent) followed by Queensland (-4.5 per cent). Figure 10: Renovations Investment by State Change in Total Renovations Investment - December Qtr % 20.0% 21.8% 22.2% 10.0% 0.0% -10.0% 8.1% -1.2% 1.7% -4.5% -6.0% 9.4% 9.8% 1.0% -5.2% 2.4% -1.2% 8.3% 5.3% -20.0% -12.4% -30.0% NSW VIC QLD SA WA TAS NT ACT Source: ABS National Accounts Qtrly Annual Dwelling stock age set to support renovations The age of a market s detached house stock is the single largest driver of renovations demand. Surveys of renovation market participants by the HIA research have repeatedly demonstrated that detached houses in the age group between 11 and 20 years are responsible for a high portion of Australia s home renovations activity. This is because of the obvious physical deterioration that needs rectification as well as more cosmetic considerations around style and appearance. The biggest trigger for renovations work is often the acquisition of an older home by a new owner renovations work typically follows. Illustrated below is an estimate of the number of detached houses in the critical year age group over the 30-year period between 1993 and At present those houses in the key renovations age bracket were built over the decade between about 1997 and Currently, the population of such houses is around the 940,000 mark. From the perspective of renovations demand, the increase in the stock of houses in this age group over the next number of years is will offer the potential for modest growth. The stock of detached houses in the year age group is anticipated to peak at about 984,000 in mid-2022 which is about 4.6 per cent higher than current levels.

15 Sep-1993 Jun-1994 Mar-1995 Dec-1995 Sep-1996 Jun-1997 Mar-1998 Dec-1998 Sep-1999 Jun-2000 Mar-2001 Dec-2001 Sep-2002 Jun-2003 Mar-2004 Dec-2004 Sep-2005 Jun-2006 Mar-2007 Dec-2007 Sep-2008 Jun-2009 Mar-2010 Dec-2010 Sep-2011 Jun-2012 Mar-2013 Dec-2013 Sep-2014 Jun-2015 Mar-2016 Dec-2016 Sep-2017 Jun-2018 Mar-2019 Dec-2019 Sep-2020 Jun-2021 Mar-2022 Dec-2022 Sep-2023 Thousands Figure 11: Estimated Number of Houses out to 2023 Estimated Estimated Number Number of Houses of in Houses 11 to 20 in 11 year to Age 20 year Range, Age 1993 Range, to to ,030 1, Trade supply shortages remain a challenge for the K&B industry The residential construction boom on the eastern seaboard has delivered some added pressure to key skilled trades. This is hardly a surprising finding. This section provides details of the relative availability of key residential construction trades, namely: ceramic tilers; electricians; joiners; and plumbers. This information is based on the unique analysis contained in the quarterly HIA Trades Report which provides Australia s most accurate account of price pressures and availability for individual residential construction trades. The four charts below provide an overview of the trend with respect to trade availability. A positive result indicates a surplus of labour, while readings below zero indicate supply shortage. Overall, the availability of skilled trades remained in short supply in three of the four trades assessed in this report. With respect to ceramic tilers, a substantial supply shortage has remained in play for some years now. The nature and age structure of this particular skilled trade means that it is regularly one of the tightest skilled labour markets in the industry. This shortage is having an adverse impact on the operations of those engaged in the kitchens and bathrooms industry. A shortage of joiners emerged in the second half of 2014 and has persisted (and generally become worse) ever since. A shortage of plumbers emerged in the December 2016 quarter, but we suspect that in time survey results will suggest that the shortage is less acute than the one-off result for the final quarter of last year suggests. Market conditions suggest that a small surplus has existed in the market for electricians in recent times and this continues to be the case according to the evidence from the HIA Trades Report. P14 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

16 Index Trades Report, December Qtr 2016 Index Trades Report, December Qtr 2016 Figure 12: Trade Availability of Ceramic Tiler s, Australia Trade Availability of Ceramic Tilers, Australia 0.00 < 0 means short supply Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Figure 13: Trade Availability of Electricians, Australia Trade Availability of Electrical, Australia < 0 means short supply Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 P15 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

17 Index Trades Report, December Qtr 2016 Index Trades Report, December Qtr 2016 Figure 14: Trade Availability of Joiners, Australia Trade Availability of Joinery, Australia < 0 means short supply Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Figure 15: Trade Availability of Plumbers, Australia Trade Availability of Plumbing, Australia < 0 means short supply Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 P16 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

18 The Kitchen Industry Background As we ve long highlighted, official statistics are bereft of information on kitchen installations, largely because installing a kitchen requires no separate or specific approval from local authorities. The annual HIA Kitchen and Bathroom survey, along with a number of other reports and statistics from HIA research and other sources provides us with a foundation to make informed estimates on the amount of work done per kitchen each year. Our estimates of work done on kitchens in new homes are based on a number of definitions and assumptions. The definition of a kitchen we have applied aims to include only the kitchen-specific costs and exclude any costs attributable to items/structures that would be present in a room that was not a kitchen. We essentially assume that a kitchen job, either renovation or installation in a new home, starts with an empty room with electricity cables and plumbing to the wall. Until a few years ago HIA Economics endeavoured to estimate the number and value of kitchen and bathroom jobs undertaken each year, in addition to providing a forecast for both new homes and renovations. HIA Economics conducted a thorough review of our forecasting methodology and processes in 2011 ahead of the release of the 2011/12 edition of the Kitchens and Bathrooms Report. This review reinforced the integrity of the methodology we employ in forecasting the kitchens and bathrooms work undertaken in new homes. However, deterioration over time in the quality of data available means that we are no longer able to determine the number and value of kitchen and bathroom renovation jobs with sufficient accuracy. We have continued to forecast aggregate renovations investment, which covers the value of all renovations work regardless of size or type. This measure does not specify the share of total renovations activity which is attributable specifically to kitchens and bathrooms work. As in previous editions of this report dating back to 2011, we have provided estimates of the notional demand for kitchen and bathroom renovations. This is a unique methodology which provides the only insight available in Australia regarding the potential for future renovations activity. The concept of notional demand for kitchen and bathroom renovations is based on the theory that kitchens and bathrooms in new homes have a finite useful life, and whether due to changing trends or wear and tear, will be replaced at some point in time. Research conducted by the HIA Economics team has, over time developed reliable estimates of the lifespans of kitchens and bathrooms. By looking back at historic records of dwelling completions, we are able to estimate the number of dwellings where kitchens and bathrooms are likely to be reaching an age where the home owners will be considering significant upgrades. It is important to acknowledge the difference between notional demand and actual demand. Actual demand is determined by a range of additional factors which can vary greatly from one period to another. Actual demand may, for example, be influenced by: dwelling prices; interest rates; investor confidence; policy settings; and employment opportunities. Notional demand abstracts from these factors and focuses purely on the replacement age of kitchens and bathrooms, and the age of housing stock. There have also been some further minor changes to the estimation methodology which were identified during the review. One of the key changes is that the value of work done is now reported in chain volume measures whereas this work had previously been reported in nominal terms. As a consequence, the figures reporting the value of work done presented in this publication are not directly comparable with years prior to the 2011/12 report. Charts and tables relating to the value of kitchens and bathrooms are located in Appendix B. All historic figures reported in this section have been estimated using the revised methodology. An outline of the methodology employed in our kitchen and bathroom forecasts and notional demand calculations can be found in Appendix A. P17 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

19 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Past Growth and Future Prospects New Home Kitchen Installations In the year ending September 2016, there were over 229,000 dwellings that commenced construction. While this is still an exceptionally high level of activity based on historical experience, the annualised level of commencements has eased since peaking at over 231,000 in the year ending March This is supportive of HIA s view that the current new residential building cycle is likely to have peaked in There were 29,634 detached houses commenced during the September 2016 quarter, which makes a total of 115,953 commencements in the year up to this point. This is consistent with the level of activity throughout the second half of this cycle, with the quarterly flow of commencements remaining within a relatively tight band around 29,000 since the first quarter of The slowing has been most evident in the multi-unit dwelling market. There were a total of 113,383 multiunit dwellings commenced across the full year to September While 2016 was a very strong year for the multi-unit segment, commencements in the September quarter of 2016 were down by around 10 per cent compared with a year earlier. It has been well documented that the current housing cycle has been markedly different to all that preceded it due to the much larger share of apartments within the new housing mix. This has presented challenges for the kitchen industry. The supply chain servicing the apartment construction sector was forced to rapidly increase its capacity to meet the product and service demands of this expanding market. While apartment construction is set to remain a large part of the new housing supply in the future, the boom it has enjoyed over the last few years (from the perspective of commencements) looks set to ease over the years ahead. The level of multi-unit dwelling commencements nationally is expected to have reached a record high of 116,362 in 2015/16 year. From this level, HIA is forecasting that multi-unit dwelling commencements will remain at quite a high level in the financial year, albeit with a decline of 11.3 per cent. Looking beyond is when we anticipate commencements will post more significant declines. Multi-unit commencements are forecast to decline by around 25 per cent in 2017/18, and then by a further 12 per cent in 2018/19. The 2018/19 year is projected to be the low point of the cycle for multiunit commencements, when 68,400 starts are forecast to occur. While we forecast a sharp contraction in multi-unit commencements over the next few years, there is still a record level of apartments under construction at the moment. With kitchens typically being installed in the latter stages of the build program the elevated demand for kitchens is likely to be sustained for some time yet. Despite the decline in the total number of commencements, the detached house segment of the market has proven resilient in the next phase of the cycle. From a national perspective, detached house commencements are forecast to ease by 1.7 per cent in ahead of a further decline of 7.3 per cent in 2017/18. After falling to a low of 104,800 starts by the 2018/19 year, the level of detached house building is forecast to gradually improve across the out years of the forecast horizon. Figure 16: Number of Kitchens Installed in New Homes, Australia Number of Kitchens Installed in New Homes, Australia, 2000 to 2021 Number of Kitchens Installed in New Homes - Australia (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P18 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

20 Number of Renovations Value of Investment ($ million) Past Growth and Future Prospects Renovated Kitchen Installations As previously noted, data limitations prevent us from producing precise estimates or forecasts for kitchen renovations activity. However, the ABS does produce estimates of the total volume of renovations investment which includes kitchen and bathroom renovations along with other types of work. The notional demand for kitchen renovations in Australia represents an estimate of the number of dwellings likely to undergo a kitchen renovation based on the age of the dwelling. This provides an indication of the potential market size in the year. It is estimated that the potential market for kitchen renovations was around 146,132, which is around 1.0 per cent larger than in 2015/16. The size of the market for kitchen renovations is projected to increase by 1.2 per cent to 147,847 in 2017/18. During the 2016 calendar year, the total value of renovations activity is estimated to have totalled $33.06 billion, which is the strongest annual result since Furthermore, this represents the third consecutive year of expansion and is a continuation of the upturn which has been underway since renovations activity bottomed out at the end of The reduction in interest rates to record low levels and the huge uplift in dwelling prices in key markets have acted as the main triggers for the recovery in home renovations activity. This is despite the fact that consumer sentiment has been pretty indifferent over recent years with an almost equal mix of optimists and pessimists hardly the most ideal situation for promoting recovery in the renovations market. The short term outlook for the flow of larger renovation jobs, including kitchens, remains positive. During 2016, a total of $4.42 billion in lending was made specifically for home renovations work. This probably represents an underestimate of the total amount of borrowed funds used for renovations activity. Even so, this represents an expansion of 13.2 per cent in the value of lending for renovations since the low point reached in the 12 months to February Looking ahead to the 2017/18 financial year, expenditure on renovations activity is expected to grow by 2.0 per cent with the growth rate expected to accelerate further to 2.7 per cent during 2018/19. This is forecast to bring the total value of all renovations work to $34.65 billion during the 2018/19 financial year. Figure 17: Notional Demand for Kitchen Renovations, Australia 150, , , , , ,000 Notional Demand for Kitchen Renovations, Australia 2011 to / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens HIA Renovations Investment Forecast CVM (RHS) 37,000 36,000 35,000 34,000 33,000 32,000 31,000 30,000 29,000 28,000 P19 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

21 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f The Bathroom Industry Past Growth and Future Prospects Bathrooms in New Homes Although there are a few exceptions to the rule, we can safely assume that almost every new home has a single kitchen. The task of estimating the demand for bathrooms is more challenging as there is a degree of variation in the number bathrooms per new dwelling. This challenge is made more difficult in the current cycle given the unprecedented growth in the multi-unit dwelling market. This segment of the market produces a very diverse range of dwelling types which spans small low cost studio apartments right through to large dwellings comparable in size to a family home. Looking at the apartment market the smallest dwellings (studio or single bedroom apartments) typically have a single ensuite type, then as the units/apartments become larger the number of bathrooms increases, through the addition of a family bathroom, powder room or additional ensuite to other bedrooms. With regard to the detached house market, the smallest new detached homes typically have a single family bathroom. As dwelling size increases the number of bathrooms progressively increases. Generally, the progression occurs firstly with the addition of an ensuite to the main bedroom, then a powder room, then ensuite to other bedrooms. As noted in the following section of the report, the Kitchen and Bathroom survey showed that it was most common for the new detached dwellings they worked on to have two bathrooms (35 per cent of respondents) with a single bathroom being the second most frequent specification (28 per cent of respondents). A further 23 per cent of respondents reported that the houses that they worked on typically had three bathrooms, and 14 per cent of respondents indicated that the houses typically had four or more bathrooms. When compared with the detached house market, the multi-unit dwelling market is skewed towards smaller dwellings with fewer bathrooms. The previous section discussed our expectation for a decline in the overall number of new dwelling commencements over the next few years, and for the decline to be primarily driven by a slowdown in the number of multi-unit projects entering the pipeline. It is estimated that demand for bathrooms in new homes will total 421,000 during the financial year. This is slightly lower than in the 2015/16 year which was the period in which the current housing cycle peaked. It is that demand for bathrooms will be reduced further in alignment with the contraction in new home commencements over the next few years. Demand from the multi-unit market is expected to decline by 24.9 per cent in 2017/18, then by a further 11.7 per cent in 2018/19 to reach a cyclical low. Demand for bathrooms from the detached house market is also forecast to decline by 7.3 per cent in 2017/18, before bottoming out during 2018/19 and 2019/20. Figure 18: Number of Bathrooms Installed in New Homes, Australia Number of Bathrooms Installed in New Homes, Australia, 2000 to 2021 Number of Bathrooms Installed in New Homes - Australia (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P20 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

22 Number of Renovations Value of Investment ($ million) Past Growth and Future Prospects Renovated Bathroom Installations The notional demand for bathroom renovations represents an estimate of the potential market size for renovations in each year. The notional demand figure is informed by age of the dwelling stock and analysis of survey responses relating to the age of homes undergoing bathroom renovations. It is estimated that there is demand for a total of 219,621 bathroom renovations in the financial year. The potential size of the market is forecast to increase by 1.1 per cent in the 2017/18 year to 222,095. Very modest growth is forecast over the remaining years of the forecast horizon, with the market projected to increase to 223,101 by 2020/21. While notional demand represents an estimate of the potential market size in a given year, actual demand for renovations will fluctuate around this. When economic conditions are favourable it is likely that the demand for bathroom renovations will exceed the notional demand, while in less favourable times the actual demand will fall short of notional demand. As noted in the previous section, the low interest rate environment provides cause for optimism with regard to the outlook for renovations activity. Importantly, the home price appreciation in the east coast capital cities has resulted in a strengthening of the household balance sheet for home owners. In many instances, households will reassess their financial positions, and in the context of the low interest rates on offer, decide that now is a good time to undertake major renovations. However, home price growth is not a feature in every market around the country and some, notably Perth, where home prices have been back tracking will face head winds. In aggregate, renovations activity across the country is forecast to follow a steady growth trajectory over the next few years. With growth of 1.6 per cent expected in, renovations expenditure is forecast to increase by 2.0 per cent in 2017/18, then by a further 2.7 per cent in 2018/19. Figure 19: Notional Demand for Bathroom Renovations, Australia 224, , , , , , , ,000 Notional Demand for Bathroom Renovations, Australia 2011 to / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens HIA Renovations Investment Forecast CVM (RHS) 37,000 36,000 35,000 34,000 33,000 32,000 31,000 30,000 29,000 28,000 P21 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

23 The Kitchen and Bathroom Industries: Activities, Attitudes, and Averages Each year, the HIA-GWA Kitchens & Bathrooms Report provides detailed analysis based on the industry s most comprehensive survey. This year s survey was conducted over February and March 2017 with a total of 237 responses being received. Of those who participated in this year s survey, about two in three (67 per cent) described their core business activity as general building/renovation work. A further 11 per cent identified kitchens as the main source of business, with another 11 per cent of survey participants indicating that both kitchens and bathrooms represented their central work focus. About one in twenty respondents (5 per cent) concentrated primarily on bathroom work only. The remaining survey respondents were involved in materials/products/appliances manufacturing (4 per cent) and supply and distribution (3 per cent). The full breakdown of responses by business activity can be found in Appendix C. The Kitchen Industry In terms of jobs relating to kitchens, the vast majority of survey respondents (82 per cent) indicate that they are hired directly by the owner of the home in which the work is being conducted. About one in eight (13 per cent) of those active in the industry are engaged by principal building contractors for kitchen work. The remaining 2 per cent of those in the survey indicated that their main avenue of kitchen work comes via wholesalers or retailers. Figure 20: Kitchen jobs engaged by: Are you typically engaged for a kitchen job by: Home owners directly 82% Principal building contractor 13% Wholesaler or retailer 2% Economics 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% P22 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

24 The results of the survey indicate that participants completed a total of 6,839 kitchen jobs during the 2016 calendar year. This involved work in each of the eight states and territories with the exception of the Northern Territory. Unsurprisingly, New South Wales accounted for the largest number of such jobs during the year (2,363 jobs). More surprisingly, Western Australia was ranked in second place according to the volume of kitchen jobs (1,454 jobs), followed by Victoria (1,388 jobs). The Australian Capital Territory had the smallest representation in the survey, with 31 jobs being completed by survey respondents there during Figure 21: Number of kitchen jobs completed in 2016 How many kitchen jobs did you complete in calendar year 2016? New South Wales 2,363 1,215 Western Australia 1,454 1,185 Victoria 1,388 2,976 Queensland 619 2,144 South Australia Tasmania Australian Capital Territory Grand Total 6,839 8,511 By and large, survey respondents are optimistic with regard to the outlook for kitchen work during Of those participating in the survey, just under one half (46 per cent) expect to see more kitchen work this year compared with last, although the largest cohort of respondents (48 per cent) anticipate that the volume of work will be about the same as in Around 6 per cent of survey respondents actually expect the amount of kitchen work to be smaller this year. Compared with last year s survey, expectations are steadier with respect to the volume of kitchen work in Figure 22: Expectations for activity levels over the next 12 months Compared with 2016, do you expect to complete more, less or the same amount of work this year? Same 39% 48% More 46% 50% Less 6% 11% 0% 10% 20% 30% 40% 50% 60% Economics 2017 expectations Last years expectations P23 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

25 For 29 per cent of respondents in this year s survey, new homes accounted for less than one in ten kitchen installation jobs conducted during However, for 13 per cent of respondents, new homes represented the source of over 90 per cent of kitchen installation work. For a clear majority of survey participants (63 per cent), new homes accounted for less than half of kitchen installation work during Figure 23: Proportion of jobs involving installation of a kitchen in a new home What proportion of jobs you worked on involved installation of a kitchen in a new home? >90% 13% 76-90% 13% 51-75% 10% 26-50% 12% 11-25% 21% <10% 29% Economics 0% 5% 10% 15% 20% 25% 30% 35% Kitchen installation work in new homes is typically completed within a relatively short time frame. According to this year s survey results, 40 per cent of new home kitchen installations were completed within 4 days. Interestingly, this compared with a substantially higher 52 per cent share in last year s survey. A further 23 per cent of kitchen installations were completed over a 5 to 8 day period. However, about one in eight new home kitchen installations took three weeks or longer to complete. P24 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

26 Figure 24: Time to install a kitchen in a new home From the beginning of onsite work, on average how long does it take to complete a kitchen installation in a new home? 31 or more days 0% 2% days days 0% 4% 6% 6% days days 4% 5% 6% 9% 9-12 days 6% 14% 5-8 days 21% 23% 4 days or less 40% 52% Economics 0% 10% 20% 30% 40% 50% 60% 2017 Pervious year The latest survey results indicate that the average value of a kitchen installed in a new home was $20,031 based on work done during This is a little lower compared with the previous year ($21,356), but the typical job value is higher than was the case in 2012 when the average value of a newly installed kitchen was $19,011. There is quite a bit of variation in the value of installed kitchens from market to market the average value is typically highest in NSW ($22,012) with the average value of kitchens installed in new homes being lowest in Queensland ($16,573). Furthermore, the survey results indicate that NSW and Victoria are the only two states where any portion of new kitchen installations are valued at $40,000 or more. Figure 25: Average value of kitchen installed in new home What is the average dollar value of a kitchen installed in a new home? New South Wales $22,012 $20,029 Australian Capital Territory $21,200 $21,000 Tasmania $18,000 $13,929 South Australia $17,615 $18,533 Queensland $16,573 $17,071 Victoria $19,229 $27,086 Western Australia $22,800 $23,313 Grand Average $20,031 $21,356 P25 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

27 What is the average dollar value of a kitchen installed in a new home? Over $40,000 3% $31,000 - $40,000 7% $21,000 - $30,000 23% $16,000 - $20,000 19% $11,000 - $15,000 30% $5,000 - $10,000 17% Economics The views of this year s survey participants with respect to the relative costs of installing kitchens as renovations compared with installations in new homes are summarised in the chart below. Over one third of participants (37 per cent) indicated that renovations were at least 10 per cent more costly than new installations, with a further 22 per cent of 0% 5% 10% 15% 20% 25% 30% 35% survey respondents regarding renovations as being 5-9 per cent more costly. Around one in four respondents (26 per cent) did no discern any difference in the cost of renovation compared with a new installation. Overall, some 69 per cent of respondents were of the view that renovations work was more costly. Figure 26: More expensive to renovate or install a kitchen in a new home Is it typically more or less costly to install a kitchen as a renovation to an existing home compared with the same fit out in a new home? 10 or more per cent lower cost 4% 5 to 9 per cent lower cost 0% 1 to 4 per cent lower 1% No difference in cost 26% 1 to 4 per cent higher cost 10% 5 to 9 per cent higher cost 22% 10 or more per cent higher cost 37% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% P26 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

28 Survey responses indicate that kitchen upgrade work is heavily concentrated amongst kitchens that are between 10 and 20 years old. Of the total, 78 per cent of respondents indicate that the kitchens in the year age group are the ones most frequently upgraded by them. The age profile of kitchen upgrades in this year s survey is a little older than last year. Figure 27: Average age of kitchens We wish to know how frequently homeowners upgrade their kitchens. What is your estimate of the average age of the kitchen you replace or modify? >31 years 0% 3% years 1% 5% years 9% 11% years 29% 42% years 36% 45% 6-10 years 8% 12% 5 or less years Economics 0% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2017 Past year Two types of job dominate the renovations work done on kitchens according to this year s survey results. Of those who partook, 47 per cent indicated that their typical renovation involved a full kitchen replacement where there are no other concurrent renovations occurring in the dwelling. A further 46 per cent of respondents identified their typical job as relating to a full kitchen replacement where other renovations work was taking place in other parts of the home. P27 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

29 Economics Figure 28: Most common type of renovations job done for kitchens Of the kitchen jobs in existing homes (renovations etc), what best describes the most common type of job? A full kitchen replacement where there are no other concurrent renovations occurring in the house 47% A full kitchen replacement where the kitchen renovation is one part of a broader renovation project 46% Modifying aspects of an existing kitchen - Repairs 3% Modifying aspects of an existing kitchen - Functional improvements 3% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% There is an almost even split between the nature of renovations work on kitchens. Just over half of respondents (53 per cent) indicate that the typical job involves an enlargement of the kitchen s footprint. However, some 47 per cent typically complete renovations work within the kitchen s existing footprint. Figure 29: Size of kitchens With regards to the size of kitchens you have renovated which of the following best describes your typical job: Within the footprint of the existing kitchen 47% Enlarge the area of the kitchen 53% P28 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

30 As is the case with kitchen installations in new homes, kitchen renovation jobs are typically completed within a relatively short space of time. The largest single portion of respondents (29 per cent) indicate that full kitchen installations as part of renovations work are typically completed in four days or less and over half of respondents typically conclude such work within eight days. However, some 13 per cent of respondents indicate that such work is three weeks or longer in duration. Figure 30: Time it takes to install a kitchen renovation From the beginning of onsite work, on average how long does it take to complete a full kitchen installation in a renovation? 30 or more days days 5% 5% 5% 5% days 3% 3% days days 12% 12% 13% 12% 9-12 days 9% 9% 5-8 days 23% 23% 4 days or less Economics 29% 31% 0% 5% 10% 15% 20% 25% 30% 35% The extent to which those conducting the work also prescribe the materials to be used is quite high. About one quarter (26 per cent) of respondents indicated that they specified the materials, components and products in all kitchen work done by them. Overall, about one half of respondents (49 per cent) indicated that they specified the materials in at least three quarters of the jobs done by them. However, some 22 per cent of survey respondents indicated that they specified materials less than one quarter of the time. P29 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

31 Figure 31: Extent of material specification In what proportion of kitchen jobs do you specify materials, components or products? All 26% 91-99% 9% 76-90% 14% 51-75% 14% 26-50% 15% 11-25% 11% <10% 11% Economics 0% 5% 10% 15% 20% 25% 30% In terms of kitchen renovations, the average value of work was a little lower this year ($20,411) compared with last ($21,862). However, the average value of work has increased over the past five years from $19,877 in NSW is the state where the average value of kitchen renovations jobs was highest ($23,238) followed by WA ($21,364) - the lowest average job value was in Tasmania ($17,714). As with kitchen installation work in new homes, NSW and Victoria were the only states to see any portion of work occur on kitchen renovations in the $40,000-plus bracket. Figure 32: Average value of kitchen renovation What is the average dollar value of a kitchen you installed in a renovation? New South Wales $23,238 $21,212 Australian Capital Territory $20,600 $19,333 Queensland $17,844 $17,643 South Australia $17,833 $19,036 Tasmania $17,714 $13,188 Victoria $18,840 $30,000 Western Australia $21,364 $19,067 Grand Average $20,411 $21,862 P30 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

32 What is the average dollar value of a kitchen you installed in a renovation? Over $40,000 6% $31,000 - $40,000 4% $21,000 - $30,000 24% $16,000 - $20,000 20% $11,000 - $15,000 32% $5,000 - $10,000 15% Economics There is a reasonably large degree of complementarity between work done by the kitchen and bathroom industry and broader categories of building work. This year s survey indicates that 30 per cent of those engaged in the kitchen and bathroom industry also conduct work on laundries 0% 5% 10% 15% 20% 25% 30% 35% and 24 per cent on other household cabinetry. About one in five (19 per cent) provide services related to outdoor kitchens and 10 per cent are able to offer shop fit outs. Compared with last year, the degree to which kitchen and bathroom industry participants operate in complementary areas has diminished slightly. Figure 33: Jobs that complement kitchen and bathroom work Do you or your business undertake work in areas which complement work done by the residential kitchen and bathroom industry? Laundries 30% 34% Other household cabinetry 24% 26% Outdoor kitchens 19% 19% Shop fit outs 10% 11% Commercial kitchens 5% 7% None of the above 5% 5% Other 1% 4% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% P31 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

33 Latest survey results show that those in the kitchen industry have a very strong preference for domestically produced goods compared with imported ones. Nearly three quarters of participants (72 per cent) indicate a preference for domestically produced goods compared with just 6 per cent having preference for imported goods. Just under one quarter (22 per cent) did not believe that the origin of goods was of importance. Figure 34: Sources of kitchen products In your kitchen jobs, do you have a preference for domestically produced/manufactured or imported products? Prefer to use domestically produced goods 72% The origin of goods is not important 22% Prefer to use imported goods 6% Economics 0% 10% 20% 30% 40% 50% 60% 70% 80% The objective of supporting local firms is a big consideration in the choice of products by those operating in the industry who indicated a preference for domestically-source materials three of five survey respondents (60 per cent) indicated that this was a factor behind their preference. Higher quality amongst domestically-sourced product was a consideration for 29 per cent of survey respondents. Pricing was a surprisingly minor factor in the choice of domestically-sourced material (9 per cent). P32 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

34 Figure 35: Why the preference for Domestic Why do you prefer to use domestically produced products? Support local industry 60% Higher quality 29% Higher quality and lower price 9% Other 1% Lower prices 1% Economics 0% 10% 20% 30% 40% 50% 60% 70% A relatively small portion (6 per cent) of those in the survey indicated that they had a preference for working with materials and product sourced from overseas. For them, the main attraction of imported material was value for money 43 per cent indicated that imported product was both higher quality and lower price. A lack of comparable local products also played a role in the decision for some respondents. Figure 36: Why the preference - Imported Why do you prefer to use imported products? Higher quality and lower price 43% No comparable local products 14% Other 14% Lower prices 14% Higher quality 14% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% P33 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

35 There is some variation in the intensity of import usage according to the sophistication of the kitchen jobs being undertaken. The prevalence of imported product usage in low end/budget finishing (62 per cent) is significantly greater than at the high end/luxury part of the market (39 per cent). Figure 37: Domestic or Imported Product use Which type of goods are typically used in your kitchen with a: Low end/budget finish 38% 62% 77% Mid range finish 23% 61% High end/luxury finish 39% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Economics Domestically produced Imported There is substantial variation in the extent of import usage depending on the type of material being used in the kitchen renovation. According to this year s survey participants, import penetration is highest for built-in appliances (80 per cent), hardware fittings (57 per cent) and tap ware (54 per cent). On the other hand, import content is lowest when it comes to cabinetry (7 per cent), bench tops (25 per cent) and wall finishes including splash backs (28 per cent). P34 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

36 Figure 38: Source of Kitchen Components Of the kitchen jobs you have done, please indicate which components are typically imported and which are domestically produced: Cabinetry (including cupboards, doors, drawers, shelving etc) 7% Bench tops 25% Built in appliances (cooktop, oven, coffee machine, dishwasher, rangehood etc) 80% Hardware fittings, door handles etc 57% Imported Wall finishes including splash backs 28% Sinks 50% Tap ware 54% Lighting 52% Floor coverings 30% Local Unsure Cabinetry (including cupboards, doors, drawers, shelving etc) 89% Bench tops 67% Built in appliances (cooktop, oven, coffee machine, dishwasher, rangehood etc) 11% Hardware fittings, door handles etc 25% Wall finishes including splash backs 63% Sinks 31% Tap ware 28% Lighting 24% Floor coverings 36% Cabinetry (including cupboards, doors, drawers, shelving etc) 4% Bench tops 8% Built in appliances (cooktop, oven, coffee machine, dishwasher, rangehood etc) 10% Hardware fittings, door handles etc 18% Wall finishes including splash backs 10% Sinks 19% Tap ware 19% Lighting 24% Floor coverings 34% Compared with last year, the extent of domesticallyproduced goods usage in the kitchen industry is about the same. Almost three quarters of survey participants (71 per cent) indicated their usage of domestic product is the same as a year ago. One in ten participants (10 per cent) now use more domestically produced goods, a little higher than the 7 per cent share who now use less domestic product than last year. P35 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

37 Figure 39: Use of domestically produced goods Compared with last year, do you now use more or less domestically produced goods? Same 71% Unsure 13% More 10% Less 7% Economics 0% 10% 20% 30% 40% 50% 60% 70% 80% P36 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

38 The Bathroom Industry The vast majority of this year s survey respondents (90 per cent) are typically engaged by home owners directly for the bathroom jobs they undertake. Just under one in ten (9 per cent) were engaged by the principal building contractors, while a very small proportion of those operating in the bathroom industry were engaged by a wholesaler or a retailer (2 per cent). Figure 40: Bathroom jobs engaged by: Are you typically engaged for a bathroom job by: Home owners directly 90% Principal building contractor 9% Wholesaler or retailer 2% Economics 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Queensland was the state which accounted for the most bathroom jobs captured in the survey, followed by WA and NSW. Of the jobs captured by the survey, the fewest were performed in Tasmania. Figure 41: Number of bathrooms completed in 2016 How many bathroom jobs did you complete in calendar year 2016? Queensland 5,359 1,588 Western Australia 1,400 2,660 New South Wales Victoria South Australia Australian Capital Territory Tasmania Grand Total 7,708 5,870 P37 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

39 Those working in the bathroom industry are a bit less optimistic for the next 12 months compared with those in the kitchens business. The majority of survey respondents (60 per cent) expect that market conditions will be about the same as in However, those expecting more work over the coming year (35 per cent) substantially outnumber those anticipating less bathroom work (6 per cent). Figure 42: Expectations for activity levels over the next 12 months Compared with 2016, do you expect to complete more, less or the same amount of work this year - Bathrooms? Same 60% More 35% Less 6% Economics 0% 10% 20% 30% 40% 50% 60% 70% New home building is a very important driver of installation work in the bathroom industry. Almost one quarter of survey participants (22 per cent) indicated that new homes accounted for over 90 per cent of their bathrooms work over the past year overall, 41 per cent of survey respondents indicated that new homes accounted for at least three quarters of their bathroom work over the past year. For a sizeable segment of the market however (36 per cent), new homes accounted for less than one quarter of their bathroom installation work. P38 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

40 Figure 43: Proportion of jobs involving installation of bathrooms in new homes What proportion of jobs you completed involved installation of a Bathroom in a new home? >90% 22% 76-90% 19% 51-75% 12% 26-50% 12% 11-25% 19% <10% 17% Economics 0% 5% 10% 15% 20% 25% There is a good deal more variation in the time taken to complete bathroom installations in new homes compared with kitchens. Not surprisingly, the time required to install a bathroom in a new home is significantly longer than for a kitchen. Over one third of survey respondents (36 per cent) typically completed bathroom installations in 12 days or less. However, a slightly lower proportion (31 per cent) required at least three weeks for the bathroom installation work. P39 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

41 Figure 44: Time to install a bathroom in a new home From the beginning of onsite work, on average how long does it take to complete a bathroom installation in a new home? 31 or more days 6% 9% days 6% 8% days 10% 15% days 13% 21% days 13% 19% 9-12 days 13% 16% 5-8 days 11% 15% 4 days or less 11% 13% Economics 0% 5% 10% 15% 20% 25% The table below summarises the average values of bathroom installations in new homes by state over recent years. The average value of such work in this year s survey ($16,197) is lower than in the previous year ($16,731) but the value of work has seen an increase over the past five years or so from $12,120 in the 2012 survey. On average, the value of bathroom installations in new homes was highest over the past year in the ACT ($20,600), followed by WA ($18,111) and NSW ($18,048). The average value of work in this category was lowest in Victoria ($12,405). Figure 45: Average value bathroom installed What is the average dollar value of a bathroom installed in a new home? Australian Capital Territory $20,600 $10,167 Western Australia $18,111 $14,147 New South Wales $18,048 $20,647 Tasmania $17,400 $11,386 Queensland $16,176 $12,284 South Australia $12,833 $16,714 Victoria $12,405 $19,269 Grand Average $16,197 $16,731 P40 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

42 What is the average dollar value of a bathroom installed in a new home? $31,000 - $40,000 4% $21,000 - $30,000 15% $16,000 - $20,000 33% $11,000 - $15,000 34% $6,000 - $10,000 14% $1,000 - $5,000 12% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% As with kitchens, a disproportionately large share of bathroom upgrade work is conducted on those in the 11 to 20-year age category this age category accounts for 72 per cent of bathroom upgrade work. A further 16 per cent is accounted for by bathrooms in the 21 to 25-year age group. Compared with last year s survey, the age profile of the bathrooms being subjected to renovations work is slightly older. Figure 46: Frequency of updating a bathroom We wish to know how frequently homeowners upgrade their bathrooms. What is your estimate of the average age of the bathroom you replace or alter? >30 years 0% 2% years 1% 3% years 9% 16% years 38% 41% years 31% 36% 6-10 years 7% 15% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% P41 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

43 There is a little more variety in the nature of bathroom upgrade work compared with kitchens. Just less than one half of survey respondents (45 per cent) indicated that their typical bathroom renovation was conducted as a standalone job, without any other renovations work being undertaken on the home. However, 33 per cent of respondents indicated that their bathroom renovations jobs were typically part of a broader renovation project within the home. An additional 7 per cent of respondents typical bathroom renovations job involved the addition of another bathroom or suite in the home. Figure 47: Most common bathroom jobs Of the bathroom jobs in existing homes (renovations etc), what best describes the most common type of job? A full bathroom replacement where there are no other concurrent renovations occurring in the house 45% A full bathroom replacement where the bathroom renovation is one part of a broader renovation project 33% Addition of a second bathroom/ensuite 7% Modifying aspects of an existing bathroom - functional improvements 6% Modifying aspects of an existing bathroom - repairs 4% Addition of a third (or more) bathroom/s 3% Modifying aspects of an existing bathroom - minor updates 3% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% With respect to bathroom renovations jobs, the vast majority of survey respondents (79 per cent) indicated that these are typically confined to the footprint of the existing bathroom. This differs from kitchen renovations work, where an expansion of the footprint is involved more frequently. For about one in six respondents (16 per cent), however, the typical bathroom renovation job does involve an expansion in the footprint. Just 4 per cent of respondents have identified moving the location of the bathroom within the home as their typical renovations job. P42 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

44 Figure 48: Bathroom size With regard to the size of bathrooms you have renovated, which of the following best describes your typical job: Within the footprint of the existing bathroom 79% Enlarge the area of the bathroom 16% Change the location of the bathroom within the house 4% Make the area of the bathroom smaller 1% Economics 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% This year s survey results again indicate that bathroom renovation jobs typically take longer to complete than kitchen work. Just 29 per cent of respondents indicated that the bathroom renovation jobs performed by them were completed in 12 days although 60 per cent of respondents indicated that jobs were typically completed within 20 days. On the other hand, one in five respondents (20 per cent of the total) typically spent 26 days or more to conclude bathroom renovations work. Figure 49: Time to complete a bathroom renovation From the beginning of onsite work, on average how long does it take to complete a full bathroom installation in a renovation? 31 or more days 8% 10% days 8% 12% days 15% 20% days 17% 18% days 15% 19% 9-12 days 13% 19% 5-8 days 4 days or less 5% 5% 5% 12% Economics 0% 5% 10% 15% 20% 25% P43 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

45 The tables below summarise the average values of bathroom renovations work by state for three recent years. Nationally, the average value of a bathroom renovation has fallen to $17,054 from $17,779 the previous year. However, the average value of work remains significantly higher than in 2012 ($15,011). According to this year s survey results, the average value of a bathroom renovation job was highest in the ACT ($21,000), followed by WA ($19,045) and Tasmania ($18,400). On average, the value of bathroom renovations work tends to be lowest in Queensland ($14,565). In all states, the proportion of renovators whose typical bathroom renovations job is valued in excess of $30,000 is very small. Figure 50: Average spend on bathroom renovation What is the average dollar value of a bathroom installed in a renovation? Australian Capital Territory $21,000 $13,125 Western Australia $19,045 $16,447 Tasmania $18,400 $12,625 New South Wales $17,641 $18,825 Victoria $16,215 $21,016 Queensland $14,565 $15,819 South Australia $1,500 $17,444 Grand Average $17,054 $17,779 What is the average dollar value of a bathroom installed in a renovation? $31,000 - $40,000 2% $21,000 - $30,000 22% $16,000 - $20,000 33% $11,000 - $15,000 33% $6,000 - $10,000 10% $1,000 - $5,000 7% Economics 0% 5% 10% 15% 20% 25% 30% 35% Of the bathroom installation work that has been conducted in new detached dwellings, the most common configuration is for the house to have two bathrooms installed (35 per cent). However, over one quarter (28 per cent) of new houses involved the installation of just one bathroom. A slightly smaller proportion (23 per cent) of new houses had three bathrooms installed. These survey results also indicate that about one in seven (14 per cent) of newly built houses had four or more bathrooms installed. P44 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

46 Figure 51: Number of bathrooms What proportion of your new detached dwellings have: 4 or more bathrooms installed 14% 3 bathrooms installed 23% 2 bathrooms installed 35% 1 bathroom installed 28% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% As was the case with kitchen work, survey respondents are strongly of the view that bathroom renovations are more costly than the installation of a bathroom in a new home. A large majority of survey participants (83 per cent) indicated that bathroom renovations were more expensive with over half (53 per cent) being of the view that renovation costs were at least 10 per cent higher. Less than one in ten respondents (9 per cent) found that the installation of a fresh bathroom in a new home was more costly than renovating an existing one. Figure 52: Cost comparison between bathrooms for new homes and renovations Is it typically more or less costly to install a bathroom as a renovation to an existing home compared with the equivalent fit out in a new home? 10 or more per cent lower cost 6% 5 to 9 per cent lower cost 2% 1 to 4 per cent lower cost 1% No difference in cost 9% 1 to 4 per cent higher cost 9% 5 to 9 per cent higher cost 21% 10 or more per cent higher cost 53% Economics 0% 10% 20% 30% 40% 50% 60% P45 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

47 P46 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS The degree to which those who work on bathroom jobs actually specify their materials and products is not as high as in the kitchen business. Only 27 per cent of survey respondents indicated that they specify the materials used at least nine times out of ten, and overall just 40 per cent of participants specify product three quarters or more of the time. The survey also showed that 20 per cent of those performing bathroom works selected the materials for less than a quarter of their jobs. Figure 53: Extent of material specification In what proportion of bathroom jobs do you specify materials, components or products? >90% 27% 76-90% 13% 51-75% 14% 26-50% 26% 11-25% 10% <10% 10% Economics 0% 5% 10% 15% 20% 25% 30% The use of imported product for bathroom work is significantly across all price segments of the market. The highest import penetration is found in bathroom work of a low end/budget finish (67 per cent), compared with a 57 per cent imported product usage rate for high end/luxury finish bathrooms. Bathrooms with a mid-range finish actually have the highest domestic product usage rate (63 per cent).

48 Figure 54: Use of domestically produced and imported goods Which type of goods are typically used in your bathrooms with a: Low end/budget finish 33% 67% 63% Mid range finish 37% 43% High end/luxury finish 57% 0% 10% 20% 30% 40% 50% 60% 70% 80% Economics Domestically produced Imported There is considerable variation in the import penetration within the different categories of material used in bathroom work. Import penetration is highest for floor tiling/floor coverings (61 per cent) consequently, it is not surprising that the import usage rate is also high when it comes to wall tiling/wall coverings (58 per cent) used for bathroom jobs. Import usage is also quite high for toilet/cistern (52 per cent), tapware (50 per cent) and fixtures and finishes such as towel rails and soap holders. In contrast, only 10 per cent of shower screens are imported. The import content is also quite low with respect to vanity units (23 per cent). Figure 55: origins of products used in bathrooms Of the bathrooms jobs you have done, please indicate which components are typically imported and which are domestically produced. Local Imported Unsure Floor Tiling/Floor coverings 20% 61% 19% Vanity unit 70% 23% 8% Toilet and cistern 31% 52% 16% Bath 35% 49% 16% Wall Tiling/Wall coverings 26% 58% 16% Sinks 36% 48% 16% Tap ware 33% 50% 16% Shower screens 81% 10% 10% Fixtures and Finishes (Towel rails, soap holders etc) 29% 50% 21% P47 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

49 P48 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS The results of this year s survey indicate that the usage rate for domestically-produced materials in bathroom jobs is about the same as last year. A large majority of participants (69 per cent) estimated that their usage of imported products was the same as a year ago. The proportion of those making greater use of imported product (10 per cent) was exactly the same as the share who indicated that they used less imported materials for bathroom jobs during the year. Figure 56: Change in use of domestically produced goods Compared with last year, do you now use more or less domestically produced goods? Unsure 11% Same 69% More 10% Less 10% Economics 0% 10% 20% 30% 40% 50% 60% 70% 80% A handful (8) of those who participated in the survey acted as suppliers and distributors to the kitchen and bathroom industry. Of these, two supply and distribute on both a trade and retail basis. Another two operate on a trade only basis, with one operating a wholesale only model. Three of the eight supply and distribute through all of these channels (i.e. trade, retail and wholesale).

50 Figure 57: Basis of supply and distribution On what basis do you supply and distribute? All of the above 38% Trade, Retail 25% Trade 25% Wholesale 13% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% The decline in the exchange rate of the Australian dollar over the past few years seems to have affected the degree to which imported product are distributed within the kitchen and bathroom industry. Of the eight suppliers and distributors, three deal mainly in imported products with two concentrating on domestically produced/manufactured product. The remaining three firms were fairly evenly mixed in terms of domestically produced and imported materials. The share accounted for by imported goods is smaller than in previous years, although the results need to be interpreted with caution given the very small number of respondents involved in this portion of the survey. Figure 58: Origin of products supplied and distributed Does the range of products/materials/appliances you supply and distribute consist of: A reasonably even balance of imported and domestically produced/manufactured products 3 Mainly imported products 3 Mainly domestically produced/manufactured products 2 Economics P49 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

51 The survey responses of nine firms engaged in the distribution of product and materials for the kitchen and bathroom industry indicates that a sizeable swing toward domestically-produced product is likely to take place over the next three years or so. Five of the nine intend to make greater use of domesticallyproduced material with only three anticipating a greater role for imported product. Two firms expect to reduce their distribution of imported product while just one of the nine envisages a lesser role for domestically-produced materials. Figure 59: Three year supply and distribution prediction In the next three years do you plan to supply/distribute: Less 1 2 No change More Economics Domestically produced Imported Amongst the nine manufacturers who partook in this year s survey, a shift towards Australian-based production also appears likely in the next few years. Of the five who provided a response to this question, four indicated that an increased amount of manufacturing would take place on Australian soil over the next three years. With respect to manufacturing activity overseas, one firm indicated that this would increase, one anticipated a reduction, and four did not envisage any major change. P50 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

52 Figure 60: Location of manufacturing In the next three years do you plan to manufacture: 1 Overseas Domestically 1 4 Economics Less No change More P51 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

53 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f State by State Kitchen and Bathroom Outlook New South Wales Outlook for New South Wales Kitchens and Bathrooms Industry Kitchen and Bathroom Installations in New Homes From the perspective of the kitchen and bathroom industry, the economic situation in New South Wales is a very supportive one. In the latest CommSec State of the States ranking, NSW is ranked first having performed particularly strongly with respect to economic growth, retail spending and business investment. Of most importance is the fact that NSW is also in pole position for dwelling starts. With superlative performance of NSW can also be gauged in the HIA s latest Housing Scorecard report (Summer 2016) - NSW extended its lead over Victoria with respect to its performance on housingspecific economic metrics. In NSW, both the detached house market and the multi-unit markets were kicking goals throughout However, it was the detached house market that stole the limelight in the September 2016 quarter with around 8,250 commencements, which equates to a 22 per cent jump over the previous quarter. This was the strongest quarter for detached dwelling commencements in NSW since the rush prior to the introduction of the GST back in 2000 (starts jumped above 8k for one quarter), and you would have to go back to the 1980s to see another quarter posting a higher level of activity. New dwelling starts increased by 19.6 per cent in NSW during 2015/16. This is projected to be followed by growth of 4.3 per cent during with a reduction of 21.3 per cent in 2017/18. During 2018/19, a fall of 14.1 per cent is forecast to bring new dwelling starts in NSW to 48,550. For the purposes of our forecasts for all states, we adopt the reasonable assumption of one kitchen per new dwelling. When it comes to bathrooms, the trend over time has seen the number of bathrooms per new dwelling increase over time. The results of our latest Kitchen & Bathroom survey inform our forecast assumptions in this regard. In NSW, the number of kitchens installed in new homes is projected to peak at 71,700 during the financial year before seeing a sizeable decline over the next four years with the cycle troughing at about 48,000 in 2019/20. Similarly, the number of bathroom installations in new homes in NSW is expected to peak at 139,900 during the financial year before declining by 20.9 per cent during 2017/18 and eventually bottoming out at about 94,400 during 2019/20. See figure 70. For the history of and outlook for the value of kitchens and bathrooms installed in new homes. Figure 61: Number of Kitchens Installed in New Homes in New South Wales Number of Kitchens Installed in New Homes, New South Wales, 2000 to 2021 Number of Kitchens Installed in New Homes - NSW (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P52 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

54 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 62: Number of Bathrooms Installed in New Homes, New South Wales Number of Bathrooms Installed in New Homes, New South Wales, 2000 to 2021 Number of Bathrooms Installed in New Homes - NSW (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Kitchen and Bathroom Renovations When it comes to home renovations activity, the past decade has clearly demonstrated that large divergences can occur between it and business conditions on the new home building side nowhere more so than in NSW. As described earlier in the report, the single most important determinant of renovations activity on the kitchen and bathroom side is the size of the dwelling stock lying in the 20 to 30-year age category. Successive rounds of the annual HIA Kitchen and Bathroom survey have consistently shown that homes in that key age group account for a disproportionately large share of kitchen and bathroom renovations work. In general, as the number of homes in this age group rises so too will the amount of kitchen and bathroom renovations jobs and vice versa. However, the degree to which this relationship bears up is also dependent on economic conditions at the time. As described in Section 3 above, the data on the number of homes in the 20 to 30-year bracket (i.e. those completed between 1987 and 1997) allows us to sketch out estimates and forecasts of what can be termed 'notional demand' for kitchen and bathroom renovations work. Relatively weak levels of new home building activity in NSW over much of the 1990s decade means that notional demand for kitchen and bathroom renovations work is likely to be quite restrained over our forecast horizon. We expect that notional demand for kitchen renovations in NSW will ease from 40,700 in the financial year to 36,400 in 2020/21. In NSW, notional demand for bathroom renovations is projected to decline from 62,000 in to 56,500 in 2020/21. Even though the age of the dwelling stock has a heavy influence on the amount of renovations work that takes place, other economic factors also have an important bearing on renovations activity in all states. These include interest rates, dwelling price movements, consumer confidence, government policies and the ease with which finance is available. The amount of turnover in the established dwelling stock is also important as the new owners of older homes will often undertake renovations after taking possession. P53 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

55 Number of Renovations Value of Investment ($ million) Figure 63: Notional Demand for Kitchen and Bathroom Renovations in New South Wales Notional Demand for Kitchen and Bathroom Renovations, New South Wales, 2011 to ,000 12,000 65,000 60,000 55,000 50,000 45,000 40,000 35,000 30, / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens Bathrooms HIA Renovations Investment Forecast CVM (RHS) 10,000 8,000 6,000 4,000 2,000 - Over the remainder of the decade and into the 2020s, the renovations market backdrop is expected to remain favourable enough to foster continued modest growth. Interest rates are likely to eventually start rising, but even then they are set to remain fairly low by historic standards. The downturn in renovations activity across NSW in the earlier years of this decade caused a postponement in some renovations jobs - many of these jobs are overdue and the backlog will continue to be redressed over the next few years. NSW saw growth of 1.4 per cent in renovations activity during 2015/16, with activity reaching $9.51 billion across the state. Activity is forecast to further increase by 10.1 per cent during, although a 2.9 per cent reversal is expected for 2017/18. During 2018/19, a slight increase of 0.6 per cent is projected to bring the value of renovations activity to $10.23 billion. P54 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

56 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f VICTORIA Outlook for the Victorian Kitchens and Bathrooms Industry Kitchen Installations in New Homes In terms of supporting demand for the kitchen and bathrooms industry, the economic situation in Victoria is undoubtedly very favourable however there are risks on the horizon. In the latest CommSec State of the States ranking, Victoria is ranked behind NSW in second place and compares very well with respect to retail spending, business investment and housing finance. Victoria's greatest standout is its rate of population growth - it's currently head and shoulders above all other states and territories on this score. The strong position of Victoria can also be gauged in the HIA s latest Housing Scorecard report (Summer 2016) - Victoria has also ranked second here with respect to its performance on housing-specific economic metrics. After posting a particularly strong level of detached house commencements in the June 2016 quarter, the level of starts dropped back by 13 per cent in September. Despite this fall, the 8,926 commencements in the September quarter still ranks as the second strongest quarter for this part of the market during the current cycle. The detached house market is forecast to ease back from the cyclical peak over the next few quarters, and a more material contraction in activity is forecast to occur during 2017/18. Further to this, the level of activity in the apartment sector is also forecast to decline over this period. New dwelling starts increased by 5.5 per cent in Victoria during 2015/16. This is projected to be followed by a 9.2 per cent decline in and a reduction of 22.0 per cent in 2017/18. During 2018/19, another fall of 5.1 per cent is forecast to bring new dwelling starts in Victoria to 46,110. In Victoria, the number of kitchens installed in new homes is estimated to have peaked at 68,600 during the 2015/16 financial year. The forecast decline in new home building will see demand for kitchens reaching a low point of about 46,100 in 2018/19. The number of bathroom installations in new homes in Victoria is believed to have reached a peak of 131,100 during the 2014/15 financial year before declining by 0.4 per cent during 2015/16. Demand for bathrooms in new houses is forecast is projected to bottom out at 90,200 during 2018/19. For the history of and outlook for the value of kitchens and bathrooms installed in new homes, see appendix A. Figure 64: Number of Kitchens Installed in New Homes, Victoria Number of Kitchens Installed in New Homes, Victoria, 2000 to 2021 Number of Kitchens Installed in New Homes - VIC (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P55 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

57 Number of Renovations Value of Investment ($ million) 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 65: Number of Bathrooms Installed in New Homes, Victoria Number of Bathrooms Installed in New Homes, Victoria, 2000 to 2021 Number of Bathrooms Installed in New Homes - VIC (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Kitchen and Bathroom Renovations The pattern of new home building activity in Victoria during the 1990s decade means that notional demand for kitchen and bathroom renovations work is likely to rise modestly over our forecast horizon. We expect that notional demand for kitchen renovations in Victoria will rise from 37,000 in the financial year, to 40,400 in 2020/21. In Victoria, notional demand for bathroom renovations is projected to increase from 54,700 in to 59,900 in 2020/21. Figure 66: Notional Demand for Kitchen and Bathroom Renovations, Victoria Notional Demand for Kitchen and Bathroom Renovations, Victoria, 2011 to ,000 8,400 60,000 8,200 55,000 8,000 50,000 7,800 45,000 7,600 40,000 7,400 35,000 7,200 30, / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens Bathrooms HIA Renovations Investment Forecast CVM (RHS) 7,000 Over the remainder of the decade and into the 2020s, the renovations market backdrop in Victoria is likely to support growth although it will be quite small in magnitude. The considerable accumulation of home equity amongst Melbourne home owners, along with the very robust state of the local labour market have been key supports to renovations activity in Victoria. year to reach $7.57 billion. Growth has resumed during with an expansion of 4.7 per cent expected for the year overall. Thereafter, growth in the Victorian market is likely to be quite slow with an increase of just 0.1 per cent forecast for 2017/18 and activity expected to rise by 0.7 per cent in 2018/19. This is anticipated to bring the value of renovations activity in Victoria to $7.98 billion. Renovations activity in Victoria actually slipped slightly (-0.1 per cent) during the 2015/16 financial P56 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

58 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f QUEENSLAND Outlook for the Queensland Kitchens and Bathrooms Industry Kitchen and Bathroom Installations in New Homes By and large, the economic situation in Queensland is reasonably favourable for residential construction - but not quite as strong as in the other large states on the eastern seaboard. In the latest CommSec State of the States ranking, Queensland is ranked fifth behind Tasmania and ahead of the Northern Territory. It compares quite well for population growth but is struggling when it comes to construction work done across all of the sectors. More encouraging is the performance of Queensland in the HIA s latest Housing Scorecard report (Summer 2016) - Queensland is ranked third here with respect to its performance on housingspecific economic metrics. The preliminary estimate of new dwelling commencements in Queensland in the September 2016 quarter showed there were a total of 12,736 starts. The mix of dwellings was 47 per cent detached houses (5,942) and 53 per cent other dwellings (6,794). The growth in detached house commencements lifted activity back above 6,000 in the March and June quarters of 2016, which was the first time Queensland had seen that level of activity since the GFC stimulus was still lifting the level of activity back in However, a reduction in multiunit activity is forecast to weigh on activity in the future. New dwelling starts are estimated to have increased by 7.9 per cent in Queensland during 2015/16. This is projected to be followed by a 8.7 per cent decline in and a reduction of 11.1 per cent in 2017/18. During 2018/19, a fall of 3.9 per cent is forecast to bring new dwelling starts in Queensland to 38,130. In Queensland, the number of kitchens installed in new homes is estimated to have peaked at 48,900 during the 2015/16 financial year, while the outlook for detached house construction remains positive further contraction in the apartment market will see demand for kitchens reaching a low point of about 38,100 in 2018/19. Similarly, the number of bathroom installations in new homes in Queensland is believed to have reached a peak of 93,100 during the 2015/16 financial year. Demand for bathrooms is forecast to decline by 6.5 per cent in with the contractionary phase of the cycle seeing demand bottom out at 74,600 during 2018/19. For the history of and outlook for the value of kitchens and bathrooms installed in new homes, see appendix A. Figure 67: Number of Kitchens Installed in New Homes, Queensland Number of Kitchens Installed in New Homes, Queensland, 2000 to 2021 Number of Kitchens Installed in New Homes - QLD 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P57 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

59 Number of Renovations Value of Investment ($ million) 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 68: Number of Bathrooms Installed in New Homes, Queensland Number of Bathrooms Installed in New Homes, Queensland, 2000 to 2021 Number of Bathrooms Installed in New Homes - QLD (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Kitchen and Bathroom Renovations New home building activity in Queensland was largely flat during the 1990s decade and this means that notional demand for kitchen and bathroom renovations work will be broadly unchanged over our forecast horizon. We expect that notional demand for kitchen renovations in Queensland will remain around 34,800 over the period between and 2020/21. Similarly, notional demand for bathroom renovations is projected to remain within the 52,000-53,000 range over the same timeframe. Figure 69: Notional Demand for Kitchen and Bathroom Renovations in Queensland 60,000 55,000 50,000 45,000 40,000 35,000 Notional Demand for Kitchen and Bathroom Renovations, Queensland, 2011 to ,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 30, / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens Bathrooms HIA Renovations Investment Forecast CVM (RHS) - Over the remainder of the decade and into the 2020s, the renovations market backdrop is expected to remain favourable enough to support pretty decent expansions in Queensland Lending for renovations lending has grown strongly over the past year in Queensland and unemployment has fallen slightly. The continued contraction in established house market turnover is, however restricting growth in renovations demand. Repeated slumps in the renovations market in Queensland over the past decade caused a postponement in some renovations jobs - many of these jobs are overdue and are likely to be worked on over the next few years. In Queensland, renovations activity saw a very strong expansion of some 8.8 per cent during the 2015/16 financial year which brought the value of the market to $7.66 billion. There is projected to be some retrenchment in activity during the year, with activity predicated to contract by 4.8 per cent. However, there is likely to be a strong recovery of some 10.5 per cent during 2017/18 followed by growth of 6.7 per cent during 2018/19 taking the value of the state s renovations market to $8.61 billion. P58 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

60 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f SOUTH AUSTRALIA Outlook for the South Australian Kitchens and Bathrooms Industry Kitchen and Bathroom Installations in New Homes The broader economic situation in South Australia is a big challenge for the state s residential building industry, as has been the case for a number of years. In the latest CommSec State of the States ranking, SA is ranked seventh behind the Northern Territory and ahead of Western Australia. Its performance with respect to retail spending and unemployment hold it back, although it performs comparatively well on the business investment front. More encouraging is the performance of SA in the HIA s latest Housing Scorecard report (Summer 2016) - SA is ranked a creditable fourth here with respect to its performance on housing-specific economic metrics. The SA government has a strategy to increase housing density within existing urban areas. This means that a larger share of new housing supply is likely to be in multi-unit type dwellings and it is likely that a smaller share will be detached houses in greenfield developments. Indeed, this trend is evident in the data. If we give the trend a linear form, the share accounted for by detached houses has declined from slightly over 80 per cent back in 2003 to around 72 per cent in New dwelling starts increased by 3.8 per cent in SA during 2015/16. This is projected to be followed by a 7.5 per cent decline in with growth of 1.2 per cent returning in 2017/18. During 2018/19, an increase of 5.7 per cent is forecast to bring new dwelling starts in SA to 10,880. In SA, the number of kitchens installed in new homes is estimated to have peaked at about 11,000 during the 2015/16 financial year. A modest but steady recovery is anticipated to bring demand back up to about 11,600 installations by 2020/21. The number of bathroom installations in new homes in SA is estimated to have totalled 21,500 during the 2013/14 financial year. This is expected to decline to around 19,800 in before a recovery kicks in and brings the number of bathroom installations back to 22,600 in 2020/21. For the history of and outlook for the value of kitchens and bathrooms installed in new homes, see appendix A. Figure 70: Number of Kitchens Installed in New Homes, South Australia Number of Kitchens Installed in New Homes, South Australia, 2000 to 2021 Number of Kitchens Installed in New Homes - SA (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P59 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

61 Number of Renovations Value of Investment ($ million) 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 71: Number of Bathrooms Installed in New Homes, South Australia Number of Bathrooms Installed in New Homes, South Australia, 2000 to 2021 Number of Bathrooms Installed in New Homes - SA (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Kitchen and Bathroom Renovations The profile of new home building in SA during the 1990s decade means that the notional demand for kitchen and bathroom renovations work is likely to increase appreciably over our forecast horizon. We expect that notional demand for kitchen renovations in SA will rise from 8,880 in the financial year to 9,650 in 2020/21. In SA, notional demand for bathroom renovations is projected to grow from 13,300 in to 14,400 in 2020/21. Figure 72: Notional Demand for Kitchen and Bathroom Renovations in South Australia Notional Demand for Kitchen and Bathroom Renovations, South Australia, 2011 to ,000 2,100 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 2,050 2,000 1,950 1,900 1,850 1,800 1,750 1,700 6, / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens Bathrooms HIA Renovations Investment Forecast CVM (RHS) Over the remainder of the decade and into the 2020s, the economic backdrop in SA will make it difficult for growth to occur. Unlike the rest of Australia, established house transactions are on the increase in SA and this is beneficial for the local renovations market. Improvement is likely to arrive later in the decade but further weakness is likely to persist over the short term - blame the labour market and the lack of more convincing dwelling price growth. 1,650 During 2015/16, SA s renovations market slipped by 0.5 per cent to a value of $1.96 billion. The short term outlook for renovations activity in the state is challenging, with activity predicted to see another contraction during (-0.1 per cent) followed by a fall of 2.6 per cent during 2017/18. Growth is anticipated to resume during 2018/19 (+1.9 per cent) resulting in the value of renovations activity rising to $1.95 billion. P60 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

62 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f WESTERN AUSTRALIA Outlook for the Western Australian Kitchens and Bathrooms Industry Kitchen and Bathroom Installations in New Homes The continuing mining downturn in the state has made the economic situation in Western Australia very challenging. In the latest CommSec State of the States ranking, WA is ranked in last place behind SA. It really struggles with respect to overall economic growth, unemployment and construction work - retail trade is currently its strongest suit. WA's comparative performance is a little better in the HIA s latest Housing Scorecard report (Summer 2016) - WA is ranked in sixth position here with respect to its performance on housing-specific economic metrics. However, declining home prices are weighing heavily on housing sentiment. New dwelling starts are estimated fell by 19.6 per cent in WA during 2015/16. This is projected to be followed by a 21.4 per cent decline in with growth of 3.1 per cent returning in 2017/18. During 2018/19, an increase of 6.3 per cent is forecast to bring new dwelling starts in Western Australia to 21,860. There were only 3,702 detached houses commenced in the September 2016 quarter which is the softest quarter for this part of the market since 2012, and marks nine quarters since the cycle peaked. If there is a silver lining to this otherwise dark cloud, it is likely that the cycle is likely to have reached its nadir. While we don t expect to see a V shaped recovery, the worst of the declines are likely to now be behind us. In WA, the number of kitchens installed in new homes is estimated to have peaked at 31,600 back in the 2014/15 financial year. In line with the forecast for commencements, demand for kitchens is projected to fall by 21.4 per cent in before starting to recover. Demand for kitchens in new homes is anticipated to reach about 23,500 in 2020/21. Similarly, the number of bathroom installations in new homes in WA is believed to have reached a peak of 63,600 during the 2014/15 financial year. It is expected to decline to around 38,900 in before recovering to 46,000 in 2020/21. For the history of and outlook for the value of kitchens and bathrooms installed in new homes, see appendix A. Figure 73: Number of Kitchens Installed in New Homes, Western Australia Number of Kitchens Installed in New Homes, Western Australia, 2000 to 2021 Number of Kitchens Installed in New Homes - WA (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P61 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

63 Number of Renovations Value of Investment ($ million) 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 74: Number of Bathrooms Installed in New Homes, Western Australia Number of Bathrooms Installed in New Homes, Western Australia, 2000 to 2021 Number of Bathrooms Installed in New Homes - WA (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Kitchen and Bathroom Renovations Strengthening volumes of new home building activity in WA over much of the 1990s decade means that notional demand for kitchen and bathroom renovations work will be quite buoyant over our forecast horizon. We expect that notional demand for kitchen renovations in WA will rise from 18,800 in the financial year to 20,300 in 2020/21. In WA, notional demand for bathroom renovations is projected to increase from 28,200 in to 30,200 in 2020/21. Figure 75: Notional Demand for Kitchen and Bathroom Renovations, Western Australia Notional Demand for Kitchen and Bathroom Renovations, Western Australia, 2011 to ,000 6,000 31,000 5,000 26,000 4,000 21,000 3,000 16,000 2,000 11,000 1,000 6, / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens Bathrooms HIA Renovations Investment Forecast CVM (RHS) - The renovations market backdrop is expected to remain favourable enough to foster continued modest growth. Over the long term, demand for renovations in WA will benefit from the big increase in the number of dwellings aged between 20 and 40 years. The repeated contractions in renovations activity in WA over the past decade will have caused a postponement in some renovations jobs - many of these jobs are overdue and the backlog is slightly to start receiving attention over the next few years. The abrupt end to the mining investment boom in WA has dented demand for renovations. However, activity bounced back by 12.3 per cent during 2015/16 to reach $4.53 billion. During, WA s renovations market is predicted to shrink by 10.6 per cent although a reasonably robust recovery of 5.7 per cent is likely to occur in 2017/18. During 2018/19, renovations activity is projected to record a second consecutive increase (+4.6 per cent) to reach $4.48 billion. P62 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

64 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f TASMANIA Outlook for the Tasmanian Kitchens and Bathrooms Industry Kitchens and Bathroom Installations in New Homes Given structural challenges that continue to face the state's economy, the economic situation in Tasmania is quite mixed. In the latest CommSec State of the States ranking, Tasmania is ranked in a respectable fourth place behind the ACT and ahead of Queensland. It compares best for unemployment and housing finance, but population growth remains a big challenge. Unfortunately, Tasmania's comparative performance is less positive in the HIA s latest Housing Scorecard report (Summer 2016) - Tasmania is ranked in last place here with respect to its performance on housing-specific economic metrics. It is somewhat surprising that the dwelling commencements figures for Tasmania aren t stronger than they have been. The number of starts has now declined for five consecutive quarters, which coincides with a time when we are seeing signs of improving economic conditions in the state and signs of strengthening demand for housing. New dwelling starts fell by 14.5 per cent during 2015/16. This is projected to be followed by a further 14.9 per cent decline in before a 5.5 per cent recovery in 2017/18. During 2018/19, an increase of 7.4 per cent is forecast to bring new dwelling starts in Tasmania to 2,340. In Tasmania, the number of kitchens installed in new homes is estimated to have peaked at about 2,830 during the 2014/15 financial year. A fall to around 2,060 is projected for before a modest recovery sets in. Installations are forecast to reach around 2,430 by 2020/21. See figure 76. Similarly, the number of bathroom installations in new homes in Tasmania is believed to have reached a peak of 5,710 during the 2014/15 financial year before falling to 4,610 in 2015/16. A second decline of 12.8 per cent is expected in before a modest recovery is projected to bring bathroom installations back to 4,730 by 2020/21. For the history of and outlook for the value of kitchens and bathrooms installed in new homes, see appendix A. Figure 76: Number of Kitchens Installed in New Homes, Tasmania Number of Kitchens Installed in New Homes, Tasmania, 2000 to 2021 Number of Kitchens Installed in New Homes - TAS (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P63 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

65 Number of Renovations Value of Investment ($ million) 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 77: Number of Bathrooms Installed in New Homes, Tasmania Number of Bathrooms Installed in New Homes, Tasmania, 2000 to 2021 Number of Bathrooms Installed in New Homes - TAS (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Kitchen and Bathroom Renovations Relatively flat levels of new home building activity in Tasmania over much of the 1990s decade means that notional demand for kitchen and bathroom renovations work is likely to remain largely unchanged over our forecast horizon. We expect that notional demand for kitchen renovations in Tasmania will hover around the 2,300 mark annually between and 2020/21. In Tasmania, notional demand for bathroom renovations is projected to remain at around 3,500 annually over the same period. Figure 78: Notional Demand for Kitchen and Bathroom Renovations, Tasmania Notional Demand for Kitchen and Bathroom Renovations, Tasmania, 2011 to ,500 4,000 3,500 3,000 2,500 2,000 1,500 1, / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens Bathrooms HIA Renovations Investment Forecast CVM (RHS) Over the remainder of the decade and into the 2020s, the renovations market backdrop is expected to remain favourable enough to foster continued modest growth. The strength of dwelling price growth in Hobart over the past year will provide many households with the resources to proceed with renovations work. However, over the longer term, there will be a big fall in the number of houses in the year age bracket and this will represent a challenge for Tasmania s renovations market. In Tasmania, renovations activity increased by 0.6 per cent during the 2015/16 financial year with the value of activity totalling $661 million. Activity is projected to increase by 3.5 per cent in followed by growth of 4.4 per cent during 2017/18. The rate of expansion is anticipated to slow to 2.2 per cent during 2018/19 with the value of Tasmania s renovations market reaching $730 million during the year. P64 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

66 2000/ / / / / / / /08 P65 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS 2008/ / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f NORTHERN TERRITORY Outlook for the Northern Territory Kitchen and Bathroom Industry Kitchen and Bathroom Installations in New Homes As a consequence of the big fall off in natural resources project investment, economic conditions in the Northern Territory are generally quite weak. In the latest CommSec State of the States ranking, the NT is ranked in sixth place behind Queensland and ahead of SA. It struggles most on retail spending, business investment and population growth but still compared very well in terms of unemployment. Like Tasmania, the NT's comparative performance is less impressive in the HIA s latest Housing Scorecard report (Summer 2016) - the NT places seventh here with respect to its performance on housing-specific economic metrics. Latest data on new dwelling starts provide further evidence of the NT's difficulties. There were a total of 218 new dwellings commenced in the NT during the September quarter of 2016, which makes a total of 1,388 for the full year to that point. This is the lowest annualised level of commencements since the 12 months ending in March 2012, and is on par with pre-mining boom levels (i.e. levels in the five years prior to 2010). New dwelling starts fell by 16.9 per cent during 2015/16. This is projected to be followed by a 38.0 per cent decline in but with an increase of 3.2 per cent the following year. During 2018/19, growth is anticipated to resume (+17.9 per cent) bringing total dwelling commencements to 1,170. In the NT, the number of kitchens installed in new homes is estimated to have peaked at 2,360 back in 2012/13 financial year. The level is expected to have dropped to 966 in which is expected to represent the low point of the cycle. Off this low base, a reasonably substantial recovery is then envisaged to follow and bring installations to 1,900 by 2020/21. Similarly, the number of bathroom installations in new homes in the NT is believed to have reached a peak of 4,540 during the 2012/13 financial year. Activity is expected to reach a low point of about 1,880 during. The ensuing recovery is projected to return the market to about 3,700 installations during 2020/21. For the history of and outlook for the value of kitchens and bathrooms installed in new homes, see appendix A. Figure 79: Number of Kitchens Installed in New Homes, Northern Territory Number of Kitchens Installed in New Homes, Northern Territory, 2000 to 2021 Number of Kitchens Installed in New Homes - NT (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f %

67 Number of Renovations Value of Investment ($ million) 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 80: Number of Bathrooms Installed in New Homes, Northern Territory Number of Bathrooms Installed in New Homes, Northern Territory, 2000 to 2021 Number of Bathrooms Installed in New Homes - NT (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Kitchen and Bathroom Renovations The profile of new home building in the NT for much of the 1990s decade means that notional demand for kitchen and bathroom renovations work is set to ease back over our forecast horizon. We estimate that notional demand for kitchen renovations in the NT will ease from 1,330 in the financial year to 1,280 in 2020/21. In the NT, notional demand for bathroom renovations is projected to fall from 2,060 to 1,970 over the same period. Figure 81: Notional Demand for Kitchen and Bathroom Renovations, NT Notional Demand for Kitchen and Bathroom Renovations, Northern Territory, 2011 to , , ,500 1, / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens Bathrooms HIA Renovations Investment Forecast CVM (RHS) - The renovations market backdrop in the NT is expected to be challenging and growth will be difficult to engender. As long as dwelling prices in Darwin continue falling it will be difficult for confidence to be restored. However, demand will receive some support from the substantial rise in the number of houses in the year age bracket until the end of the decade. During 2015/16, the value of renovations activity in the NT was $276 million which, surprisingly, was 7.0 per cent up on a year earlier. Momentum has continued into the new financial year, with the overall volume of renovations activity likely to expand by 14.5 per cent in. However, 2017/18 is expected to represent a reality check with an 11.4 per cent decline in renovations activity. During 2018/19, the value of renovations activity in the NT is forecast to slip by 0.2 per cent to $279 million. P66 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

68 2000/ / / / / / / /08 P67 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS 2008/ / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f AUSTRALIAN CAPITAL TERRITORY Outlook for the ACT Kitchen and Bathroom Industry Kitchens and Bathrooms Installations in New Homes The economic environment in the ACT is generally positive, given the bedrock offered by its heavily public sector-oriented economy. In the latest CommSec State of the States ranking, the ACT is ranked in third place behind Victoria and ahead of Tasmania. It performs best with respect to housing finance and unemployment - construction work is probably the only area where is looks any way weak. The ACT's comparative performance is not as good when it comes to the HIA s latest Housing Scorecard report (Summer 2016). On this ranking, the ACT places fifth based on its performance on housingspecific economic metrics. Over the past five years the ACT new home building market has continually shown remarkable resilience to fluctuations in economic conditions, arguably the most expensive new residential lots in the country, and intensifying conjecture about the possibility of an oversupply of apartments. While the changes in the level of activity did not have a material impact on the level nationally, they are significant for the local ACT market. There were a total of 777 new dwellings commenced in the ACT during the September quarter of 2016, which makes a total of 4,556 for the full year to that point. New dwelling starts increased by some 26.0 per cent during 2015/16. This is projected to be followed by a 21.8 per cent reduction in and another fall of 2.0 per cent in 2017/18. During 2018/19, an increase of 5.6 per cent is forecast to bring new dwelling starts in the ACT to 4,130. In the ACT, the number of kitchens installed in new homes is estimated to have peaked at 5,100 during the 2015/16 financial year but this is expected to have dropped to 3,990 in. A smaller reduction the following year is anticipated to bring the market to a bottoming out point of 3,910 during 2017/18. Similarly, the number of bathroom installations in new homes in the ACT is believed to have reached a peak of 9,700 during the 2015/16 financial year. Activity is projected to decline by 19.8 per cent during before a more measured reduction brings the market to a cyclical low of 7,650 in 2017/18. A modest recovery is forecast for the reminder of the forecast horizon. For the history of and outlook for the value of kitchens and bathrooms installed in new homes, see appendix A. Figure 82: Number of Kitchens Installed in New Homes, ACT Number of Kitchens Installed in New Homes, Australian Capital Territory, 2000 to 2021 Number of Kitchens Installed in New Homes - ACT (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f %

69 Number of Renovations Value of Investment ($ million) 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 83: Number of Bathrooms Installed in New Homes, ACT Number of Bathrooms Installed in New Homes, Australian Capital Territory, 2000 to 2021 Number of Bathrooms Installed in New Homes - ACT (thousand) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Kitchen and Bathroom Renovations An increase in new home building activity in the ACT as the 1990s decade unfolded means that notional demand for kitchen and bathroom renovations work is likely to strengthen over our forecast horizon. We expect that notional demand for kitchen renovations in the ACT will rise from 2,340 in the financial year to 2,600 in 2020/21. In the ACT, notional demand for bathroom renovations is projected to expand from 3,560 in to 3,890 in 2020/21. Figure 84: Notional Demand for Kitchen and Bathroom Renovations, ACT Notional Demand for Kitchen and Bathroom Renovations, Australian Capital Territory, 2011 to , ,000 3,500 3,000 2,500 2,000 1,500 1, / / / / /16 f 2017/18f 2018/19f 2019/20f 2020/21f Kitchens Bathrooms HIA Renovations Investment Forecast CVM (RHS) Over the remainder of the decade and into the 2020s, the renovations market backdrop in the ACT is expected to remain favourable enough to foster continued modest growth. The downturn in renovations activity in the earlier years of this decade caused a postponement in some renovations jobs - many of these jobs are overdue and the backlog will continue to be addressed over the next few years. The recent rebound in dwelling price growth in Canberra is also likely to fuel demand. The longer term outlook will be more challenging because the number of houses in the year age group in the ACT will fall steadily over the next decade. The ACT s renovations market saw a strong 2015/16 with the size of the market increasing by 6.9 per cent to $372 million. The market is set to weaken by 4.9 per cent during before growth resumes strongly in 2017/18 (+8.6 per cent). The 2018/19 financial year is anticipated to see growth ease to 3.1 per cent, with the value of renovations activity in the ACT projected to reach $396 million. - P68 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

70 P69 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS APPENDIX A: Methodology Underlying Kitchen and Bathroom Forecasts HIA Economics regularly publishes forecasts of industry activity and within this report we apply these forecasts specifically to the kitchens and bathrooms industry. Compiling kitchen and bathroom forecasts is a more complex task than our regular forecasts as there is no definitive record of the number and value of installed kitchens and bathrooms. Therefore there is no definitive point of reference on which to base our forecasts. This appendix describes how we arrive at our forecasts for activity in the kitchens and bathrooms industry. Up to and including the 2010/11 edition of the Kitchens and Bathrooms Report the forecasts comprised of four components: Number of kitchens and bathrooms installed in new homes Number of new kitchens and bathrooms installed in established homes (renovations) Value of kitchens and bathrooms installed in new homes Value of new kitchens and bathrooms installed in established homes Following a thorough review of our processes in 2010/11 we were satisfied with the integrity of the forecast methodology used in forecasting kitchens and bathrooms work in new homes. However, deteriorating data quality has meant that we are no longer able to provide forecasts of the number and value of kitchen and bathroom renovation jobs. As of the 2011/12 edition of the Kitchens and Bathrooms Report we introduced the concept of notional demand for renovations. Forecasts for New Homes Estimating the number of kitchens and bathrooms installed in new homes each year is a relatively simple matter. Building activity statistics compiled and published quarterly by the ABS show, with reasonable accuracy, the number of dwellings commenced and completed. As each dwelling almost certainly has a kitchen, and as very few have more than one, the number of dwellings started or finished each year provides a very good estimate of the number of kitchens installed. Unlike the installation of kitchens in new homes, the number of bathrooms in each new home can vary. From ABS data, it is estimated that throughout the 1970s and most of the 1980s, the number of multiple bathroom homes was small. In 1985/86 it is estimated that for every 100 new homes, 120 bathrooms were installed. More recently however, improvements in disposable income, rising living standards and an increase in the number of two storey dwellings have boosted the average. Results from HIA s annual Kitchens and Bathrooms Survey (survey of HIA members) are used to inform an estimate of the average number of bathrooms per dwelling in homes constructed during the year. For this report we use housing starts, rather than completions, for no other reason than it is customary in the industry to focus more on starts than completions. Whichever measure is used there will be some overlap. Some homes started in the December quarter of 2011, for example, will not have had their kitchens installed until the March quarter of 2012; and some homes completed in the March quarter of 2012 will have had their kitchens installed in the December quarter of However, the leads and lags are assumed to be only a matter of a few months. Survey results are also used to estimate the average value of kitchen and bathroom installations in new homes. The value of work done is reported in chain volume measures whereas prior to the 2011/12 report these had been reported in nominal terms. This change was made to provide a better indication of the change in the amount of work being done by removing the impact of changes in input prices. As a consequence of these changes, the figures reporting the aggregate value of work done are not directly comparable with editions prior to 2011/12. Renovations Estimating the number and value of kitchen and bathroom activity within the renovations market is not as straight forward as for the new home sector. There are a number of reasons for this, firstly because renovations activity is poorly recorded by official data sources. Furthermore, the level of detail required to determine whether renovation work included work on kitchens or bathrooms is not collected at all. Second, the scale of renovation jobs is very broad - for example it could be a relatively minor project of replacing a kitchen bench top or a major project requiring structural changes to the home. Owing to the highly variable scale of renovation projects, accurately measuring the average value of a renovated kitchen or bathroom is very difficult. However, the results of HIA s annual Kitchen and Bathroom survey enable us to make estimates of the average values of kitchens and bathrooms replaced during renovations, excluding any structural alterations to the dwelling. In the 2011/12 edition of the report we introduced the concept of notional demand for renovations to provide the best available indicator of the potential market size for kitchen and bathroom renovations. The concept of notional demand for kitchen and bathroom renovations is based on the theory that kitchens and bathrooms in new homes have a finite useful life, whether due to changing trends or wear

71 and tear. They will be replaced at some point in time. Over almost a decade of member surveys, the HIA Economics Group has developed reliable estimates of the lifespans of kitchens and bathrooms. By looking back at historic records of dwelling completions, we are able to estimate the number of dwellings where kitchens and bathrooms are likely to be reaching an age where the home owners will be considering upgrades. It should be noted that the notional demand model only considers a home s first kitchen or bathroom replacement. Kitchens and bathrooms are likely to be renovated multiple times during the life of a home so it is likely that notional demand provides a conservative estimate. Notional demand should not be confused with actual demand. Actual demand is determined by a range of additional factors which can vary greatly from one period to another. These may include dwelling prices, interest rates, investor confidence, policy settings, and employment opportunities. Notional demand abstracts from these factors and focuses purely on the replacement age of kitchens and bathrooms and the age of housing stock. HIA s regular Renovations Forecast, encompassing all types of renovations work, is premised on actual demand and discussion of the outlook for all renovation activity have been included in the report. While this does not specifically isolate activity on the kitchen and bathroom renovations, the economic drivers underpinning these forecasts are equally applicable to the kitchen and bathroom subsector of the industry. P70 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

72 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f APPENDIX B: Kitchen and Bathroom Forecasts by state Figure 85: Value of Kitchens Installed in New Homes in New South Wales Value ($m) of Kitchens Installed in New Homes, New South Wales, 2000 to 2021 Value of Kitchens Installed in New Homes - NSW ($million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 86: Value of Bathrooms Installed in New Homes, New South Wales Value ($m) of Bathrooms Installed in New Homes, New South Wales, 2000 to 2021 Value of Bathrooms Installed in New Homes - NSW ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 87: Value of Kitchens Installed in New Homes, Victoria Value ($m) of Kitchens Installed in New Homes, Victoria, 2000 to 2021 Value of Kitchens Installed in New Homes - VIC ($million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P71 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

73 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 88: Value of Bathrooms Installed in New Homes, Victoria Value ($m) of Bathrooms Installed in New Homes, Victoria, 2000 to 2021 Value of Bathrooms Installed in New Homes - VIC ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 89: Value of Kitchens Installed in New Homes, Queensland Value ($m) of Kitchens Installed in New Homes, Queensland, 2000 to 2021 Value of Kitchens Installed in New Homes - QLD ($million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 90: Value of Bathrooms Installed in New Homes, Queensland Value ($m) of Bathrooms Installed in New Homes, Queensland, 2000 to 2021 Value of Bathrooms Installed in New Homes - QLD ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P72 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

74 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 91: Value of Kitchens Installed in New Homes, South Australia Value ($m) of Kitchens Installed in New Homes, South Australia, 2000 to 2021 Value of Kitchens Installed in New Homes - SA ($million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 92: Value of Bathrooms Installed in New Homes, South Australia Value ($m) of Bathrooms Installed in New Homes, South Australia, 2000 to 2021 Value of Bathrooms Installed in New Homes - SA ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 93: Value of Kitchens Installed in New Homes, Western Australia Value ($m) of Kitchens Installed in New Homes, Western Australia, 2000 to 2021 Value of Kitchens Installed in New Homes - WA ($million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P73 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

75 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 94: Value of Bathrooms Installed in New Homes, Western Australia Value ($m) of Bathrooms Installed in New Homes, Western Australia, 2000 to 2021 Value of Bathrooms Installed in New Homes - WA ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 95: Value of Kitchens Installed in New Homes, Tasmania Value ($m) of Kitchens Installed in New Homes, Tasmania, 2000 to 2021 Value of Kitchens Installed in New Homes - TAS ($million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 96: Value of Bathrooms Installed in New Homes, Tasmania Value ($m) of Bathrooms Installed in New Homes, Tasmania, 2000 to 2021 Value of Bathrooms Installed in New Homes - TAS ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P74 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

76 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 97: Value of Kitchens Installed in New Homes, Northern Territory Value ($m) of Kitchens Installed in New Homes, Northern Territory, 2000 to 2021 Value of Kitchens Installed in New Homes - NT ($million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 98: Value of Bathrooms Installed in New Homes, Northern Territory Value ($m) of Bathrooms Installed in New Homes, Northern Territory, 2000 to 2021 Value of Bathrooms Installed in New Homes - NT ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 99: Value of Kitchens Installed in New Homes, ACT Value ($m) of Kitchens Installed in New Homes, Australian Capital Territory, 2000 to 2021 Value of Kitchens Installed in New Homes - ACT ($million) (% change) 2000/ / / / / / / / / / / / / / / / % f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P75 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

77 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f 2000/ / / / / / / / / / / / / / / /16 f 2017/18 f 2018/19 f 2019/20 f 2020/21 f Figure 100: Value of Bathrooms Installed in New Homes, ACT Value ($m) of Bathrooms Installed in New Homes, Australian Capital Territory, 2000 to 2021 Value of Bathrooms Installed in New Homes - ACT ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 101: Value of Kitchens Installed in New Homes in Australia Value ($m) of Kitchens Installed in New Homes, Australia, 2000 to 2021 Value of Kitchens Installed in New Homes - Australia ($million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % Figure 102: Value of Bathrooms Installed in New Homes, Australia Value ($m) of Bathrooms Installed in New Homes, Australia, 2000 to 2021 Value of Bathrooms Installed in New Homes - Australia ($ million) (% change) 2000/ / / / / / / / / / / / / / / / f % 2017/18 f % 2018/19 f % 2019/20 f % 2020/21 f % P76 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

78 APPENDIX C: Additional information regarding survey respondents Figure 103: Locations of the majority of work? In what state do you do the majority of your work? Victoria 21% Queensland 18% Western Australia 11% South Australia 9% Tasmania 5% Australian Capital Territory 3% Northern Territory 1% Economics 0% 5% 10% 15% 20% 25% Figure 104: Main activities of business What best describes the main activities of your business? General Building/Renovation work 67% Kitchens 11% Kitchens and Bathrooms 11% Bathrooms 5% Materials/Products/Appliances Manufacturing 4% Supply and Distribution 3% Economics 0% 10% 20% 30% 40% 50% 60% 70% P77 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

79 Figure 105: Description of work done by respondents - Kitchens Which of the following best describes what you do? - Kitchens Kitchen sales, manufacture, installation and project mangement 48% Kitchen manufacturer 20% Cabinet maker 16% Kitchen retailer 8% Kitchen product/material/appliance manufacturer 4% Company Director/Senior management 4% Economics 0% 10% 20% 30% 40% 50% 60% Figure 106: Description of work done by respondents - Bathrooms Which of the following best describes what you do? - Bathrooms Bathroom sales, manufacture, installation and project management 42% Company director/senior management 25% Bathroom installer 25% Bathroom manufacturer 8% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% P78 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

80 Figure 107: Description of work done by respondents - kitchens and bathrooms Which of the following best describes what you do? - Kitchens and Bathrooms Kitchen and Bathroom sales, manufacture, installation and project management 44% Cabinet maker 20% Company director/senior management 12% Kitchen and Bathroom design and project manager 8% Trade subcontractor 4% Kitchen and Bathroom manufacturer 4% Kitchen and Bathroom installer 4% Family member assisting with administration of the business 4% Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Figure 108: Description of work done by respondents - general building and renovation Which of the following best describes what you do? - General building/renovations work New home builder 28% New home and renovations builder 26% Renovations builder 25% Trade subcontractor 7% Company director/senior management 6% Other 4% Business owner 4% Economics 0% 5% 10% 15% 20% 25% 30% P79 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

81 Figure 109: Description of kitchens and bathroom renovation jobs What proportion of renovation jobs you undertook in calendar year 2016 involved the replacement of a <10% 11-25% 26-50% 51-75% 76-90% >90% None New South Wales Kitchen only 19% 7% 12% - 2% 2% 58% Bathroom Only 16% 19% 19% 7% 2% 2% 35% Kitchen and bathroom 17% 15% 10% 2% 6% 4% 46% Victoria Kitchen only 15% 11% % Bathroom Only 10% 7% 17% 3% - 7% 55% Kitchen and bathroom 9% 21% 9% - 15% 12% 35% Queensland Kitchen only 21% 8% 4% % Bathroom Only 13% 13% 9% 4% 4% - 57% Kitchen and bathroom 14% 5% 5% 5% - 5% 68% South Australia Kitchen only 33% 11% 11% % Bathroom Only 45% 18% - 9% % Kitchen and bathroom 25% - 8% 8% 8% 8% 42% Western Australia Kitchen only 20% 13% % 60% Bathroom Only 13% 20% % 60% Kitchen and bathroom 11% 6% 17% 11% 6% - 50% Tasmania Kitchen only 17% 17% % Bathroom Only 50% 17% 17% % Kitchen and bathroom 38% 25% % 25% Australian Capital Territory Kitchen only 67% 33% Bathroom Only % - 50% Kitchen and bathroom % 25% 25% - 25% Figure 110: Description of work done by respondents - materials/products/appliance manufacturing Which of the following best describes what you do? - Materials/Products/Appliances Company director/senior management 56% Manufacturer of Kitchens and Bathroom products/appliances 11% Manufacturer and distributer of Kitchens and Bathroom products/appliances 11% Distributer of Kitchens and Bathroom products/appliances 11% Business owner 11% Economics 0% 10% 20% 30% 40% 50% 60% P80 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

82 Figure 111: Description of work done by respondents - supply/distribution Which of the following best describes what you do? - Supply/Distribution Company director/senior management 56% Manufacturer of Kitchens and Bathroom products/appliances 11% Manufacturer and distributer of Kitchens and Bathroom products/appliances 11% Distributer of Kitchens and Bathroom products/appliances 11% Business owner 11% Economics 0% 10% 20% 30% 40% 50% 60% Figure 112: Range of average dollar value of a kitchen installed in a new home by state What is the average dollar value of a kitchen installed in a new home? New South Wales Victoria Queensland South Australia Western Australia Tasmania Australian Capital Territory $5,000 - $10,000 12% 21% 33% 31% 10% - - $11,000 - $15,000 31% 42% 20% 15% 10% 57% 40% $16,000 - $20,000 17% 8% 20% 31% 30% 29% 20% $21,000 - $30,000 26% 13% 27% 23% 40% - 40% $31,000 - $40,000 7% 13% % 14% - Over $40,000 7% 4% Figure 113: Range of average dollar value of a kitchen installed in a renovation by state What is the average dollar value of a kitchen you installed in a renovation? New South Wales Victoria Queensland South Australia Western Australia Tasmania Australian Capital Territory $5,000 - $10,000 7% 23% 25% 25% 10% - - $11,000 - $15,000 43% 35% 19% 8% - 57% 40% $16,000 - $20,000 10% 12% 25% 42% 40% 29% 20% $21,000 - $30,000 24% 15% 31% 25% 40% 14% 40% $31,000 - $40,000 2% 12% % - - Over $40,000 14% 4% P81 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

83 Figure 114: Range of average dollar value of a bathroom installed in a new home by state What is the average dollar value of a bathroom installed in a new home? New South Wales Victoria Queensland South Australia Western Australia Tasmania Australian Capital Territory $1,000 - $5,000 11% 27% 6% 13% 13% - - $5,000 - $10,000 4% 27% 25% 25% - 20% - $11,000 - $15,000 36% 33% 25% 50% 25% 60% 20% $16,000 - $20,000 32% 40% 31% 25% 50% - 40% $21,000 - $30,000 25% - 13% - 25% - 40% $31,000 - $40,000 4% - 6% % - Over $40, Figure 115: Range of average dollar value of a bathroom installed in a renovation by state What is the average dollar value of a bathroom installed in a renovation? New South Wales Victoria Queensland South Australia Western Australia Tasmania Australian Capital Territory $1,000 - $5,000 14% 15% 6% $5,000 - $10,000 4% 10% 31% - 9% 20% - $11,000 - $15,000 32% 40% 25% 56% 18% 40% 20% $16,000 - $20,000 32% 25% 25% 44% 45% 20% 40% $21,000 - $30,000 29% 25% 19% - 27% - 40% $31,000 - $40,000 4% % - Over $40, P82 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

84 P83 HIA GWA KITCHENS AND BATHROOMS REPORT - PAST GROWTH AND FUTURE PROSPECTS

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