The Home Improvement Index 2024
Drivers of home improvement
Multiple factors influence where home improvement occurs and when. Constant among these factors is the state of the economy and changes to household income.
But there are unexpected drivers too, such as the pandemic causing a surge in home working and a huge increase in investment in garden works.
The overall influence of each of these factors shifts over time, changing where growth occurs and what types of home improvement are on the up or heading down.
Currently there are signs that the economy, and in particular the cost-of-living crisis is depressing much home improvement work. But the flip side is that households are increasingly eager to take the edge off steeper energy costs. This has produced a big upswing in applications for solar panels and the citing of “insulation” in home improvement applications.
These factors have been explored in more detail in previous editions of the Home Improvement report. But it is worth recapping on the key drivers to provide context as we examine the latest data. Scroll down to find out more:
- Economic factors
- Household and personal characteristics
- Location characteristics
- Moving home
- Planning regulations
- Energy efficiency
- House prices
Economic factors
The economy is clearly a major determinant for home-improvement activity. Barbour ABI reports on home improvement show a strong relationship when we look at the levels of planning applications against economic activity.
This is to be expected as much of the spending on home improvement is discretionary. In tough times it is likely to be delayed. This effect can also be seen in other big-ticket purchases such as cars. Consumer confidence provides a good indicator of future home-improvement activity (see chart).
How our spending patterns change over time
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Household and personal characteristics
The type of household will greatly determine which homes are improved. Wealth, income, age, culture, and structure all influence spending on home improvement. For example, the ONS Family Spending data show the top 20% of households by income on average spend more than twice as much on home improvements as much as the second 20% and three times as the third 20% (see chart 1).
Share of spending on home improvement from 2013 to 2022 by gross income decile group
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Note: The higher the number the higher the income
Wealth matters too. But its effects are harder to track. But we can see the effect in places which have become popular retirement destinations for older households with high levels of housing wealth. Here significant sums are spent on doing up existing homes bought by this older cohort.
Therefore, along with wealth, age also plays a part in spotting households likely to undertake home improvement work and the likely types of work that might be popular in an area. However, the patterns of spending by age are complicated by uneven distribution of home ownership across generations.
ONS family spending data suggest over the past decade, that households under 30 have spent far less than other age groups on home improvement. However, as the chart 2 shows, during the pandemic these households boosted their spending significantly, presumably because spending on holidays or entertainment at the time was restricted.
It is important, however, to recognise that the influence of these factors can change markedly over time as the economic backdrop shifts.
Average annual home improvement spend by age of household reference person 2018-20 and 2020-22
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Location characteristics
Different settings create different drivers for home improvement. Among the most obvious differentiator between locations is whether they are urban or rural. Defining the boundaries between urban and rural locations presents challenges. Previous Barbour ABI reports have shown, using broad classifications from the Office for National Statistics, that around 80% of private homes in Britain fall within urban areas. However, the share of applications splits 70% urban and 30% rural.
This suggests that private homes in rural areas are more likely to be improved than those in urban areas. Partly this will be due to the mix of housing and the limitations of expanding the footprint of a home in many urban areas.
Using data from Consumer Data Research Centre (Postcode Context Classification) and Nomis (Postcode resident and household estimates, England & Wales: Census 2021) we can see what types of locations are more likely to see home improvements (see table 1).
Based on the CDRC pen portraits of settlements, outer suburbs have seen the most home improvement applications over the past 10 years, above 37%. But just over 40% of households live in these communities. However, inner suburbs see a bigger than average share of home improvement applications per household.
Shares of households and applications by postcode context classification over the 10 years 2014 to 2023
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Distribution of applications between differing location types by region 2023
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Rural communities, meanwhile, see around double the average number of applications per household, while inner cities and town centres see much lower than average shares.
What is also important to appreciate is how the types of locations vary between regions and how this variation influences where home improvement is occurring (table 2). So, if we were to compare 2019 with 2023 data we would see that the balance of activity had shifted. The shares of overall applications in “outer suburbs” and “high density urban core” were down while the shares in both “rural residences” and “inner city & town centres” rose. This was most evident in north of England and Wales.
Importantly though, the setting will also influence the type of home improvement. Loft conversion or basement works are more prevalent in urban areas. Garden buildings and home offices will be weighted, relative to the housing stock, more heavily towards rural settings.
Moving home
Home improvement applications and housing transactions GB monthly figures and 12-month moving average
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However, a further factor is worth consideration. The financial balance between moving and improving changes, which influences and alters the propensity to move or improve. So, for example, in an area which has experienced rapid and strong inflation in house price, it may prompt more households than otherwise to improve rather than move, if they need more space and wish to stay in the same neighbourhood.
Planning regulations
Planning laws inevitably make a difference to the propensity or need of households to apply for permission to improve their home. Restrictions in conservation areas or national parks might, for instance, reduce the appetite among some households to apply for planning permission.
Meanwhile changes to permitted development rights may lead to more home improvements done without planning permission. However, the effects of changes to planning regulations are hard to see within the trend in the data for home improvement applications. This suggests the effects are subtle and could easily be overstated.
Tighter planning regulations may also tip the balance for some homeowners to move rather than improve their current home.
Energy efficiency
The desire to reduce energy consumption is a growing factor in home improvement, with households wishing to reduce bills and the pressure to hit net zero targets. Britain can stake a claim to having the oldest housing stock in the world and age of housing is heavily correlated with poor energy efficiency.
Recent pressure on households from rapid rises in energy prices has spurred greater home improvement and this is likely to continue as energy security remains an issue. A greater spotlight on the energy efficiency of homes when they come up for sale will also prompt households to invest in energy saving measures.
Recent Barbour ABI data show a huge rise in applications for solar panels and increasing numbers of applications cite insulation.
Adding to the pressure on households to raise the energy efficiency of their homes is the reasonable expectation of ever tightening regulation. Governments have a reputation for vacillation over energy saving legislation. But, as the pressure to meet net zero grows, moves to toughen regulation and sweeten incentives to prompt greater energy efficiency are likely to increase.
House prices
The chart below shows the number of home-improvement applications for every 1,000 private homes in 2020 against the average price for existing homes in each borough, excluding London. The correlation is striking. Outside London there is a very strong link between house prices and home improvement. While there is a correlation in London it is much weaker, in part reflecting the complexities of the market.
Furthermore, where house prices rise faster than the cost of building works more projects become financially viable, and so more likely to happen. For instance, rising house prices will tend to increase the gap between a three-bed and four-bed home. This will help tip the balance for households looking for an extra bedroom towards improving rather than moving home.
Home improvements and house prices by local authority (separating out London)
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Move or improve?
The choice between moving or improving is about more than money. People’s relationships with neighbours, family, and friends may be a big factor. The closeness to facilities that matter to a given household will play a part in the decision. The emotional ties and family memories come into the equation. Bad experiences with their current home may also influence households’ decisions to move rather than improve when they are looking to upgrade.
Ultimately finances do count for a lot. The financial benefits of improving rather than moving will vary according to a range of factors. For example, the relative value of house prices will heavily influence the decision. Generally, the higher the relative value of homes in an area the more financially beneficial improving will be.
Across the nation, the cost of adding a new bedroom through home improvement will range less than the cost of trading up to a house with an extra bedroom. In markets where house prices are low the cost of adding a new bedroom, for example, may heavily outweigh the cost of moving. In areas where homes are very expensive it may cost considerably more to trade up than to add an extra room.
This in part explains the higher levels of home improvement in higher cost areas. One restraint may be that gaining planning permission in high house-price locations, if needed, may be far tougher.
Location types
Definitions of types
A: Inner City and Town Centres: Predominantly found covering many central areas of cities and towns; this group characterises many highstreets and small commercial premises supporting large workday populations. Coalescing with commercial land uses, residential accommodation is mostly flats. This group is also observed in some less central commercial parks/zones; and dense terraced residential houses close to these areas with very limited green spaces.
B: Spacious Residential Properties: Areas characterised by this group are predominantly residential and often contain properties at a low density, with gardens, wide streets and often surrounded by green spaces. Typically, this group is found within larger developments on suburban fringes and in villages, and mostly containing property that has been built since the 1940s, although less prevalently since the 2000s.
C: High Density Urban Core: This cluster tends to be found within the built-up urban core of many large towns and cities but also characterises areas of out-of-town business, retail, or industrial zones. Coalescing with structures supporting a large workday population, residential accommodation is predominantly in flats, but also includes areas of dense traditional terraced houses.
D: Rural Residences: Properties within this group tend to be residential and surrounded by green spaces. These areas are characterised by clusters of larger adjoining or traditional cottages, with ages dating from before 1900.
E: Rural Properties and Farms: This group are mostly found within rural or more isolated locations and are typically characterised by larger residential properties or farms. As might be expected, properties tend to be surrounded by green spaces; however, many plots also have large paved agricultural yards.
F: Inner Suburban Townhouses and Large Terraces: Properties within these inner suburban locations tend to comprise semi-detached properties or larger terraces; with some properties sub divided into flats. Many of the properties within these areas are pre-World War 2, some of which have gardens and or outdoor space.
G: Outer Suburbs: This group is mostly found towards the periphery of urban areas, consisting of mature residential neighbourhoods of mainly semi-detached properties. Many of the properties were built after World War 2 up to the 1970s and 1980s.
