28 July 2026 | See disclaimer
In the past financial year, Australians spent $53.8 billion on home improvements and renovations alone — the largest amount since 2022. [1] And surprisingly, residents in Brisbane broke records, spending $1.086 billion on extensions and renovations that need town planning approval. In the last quarter of 2025, the Australian Bureau of Statistics also reported an increase in the total value of building work done across the country, which rose to $43.9 billion, indicating an overall upward trend of Australians opting to renovate and build their dream home. [2]
But what you may not know is that renovating your home and undertaking such extensive building work can affect your home insurance. That’s why it’s important to check your policy and communicate with your insurer about the work being carried out before your renovations commence to ensure you’re properly covered.
With plenty of homeowners undertaking more renovations every year, we have investigated which Australian states are spending the most on home renovations and what people are looking to improve around their homes.
Australia’s Renovation Hotspots
| State | Renovation Spend |
|---|---|
| New South Wales | $19.03 billion [1] |
| Victoria | $12.458 billion [1] |
| Queensland | $12.069 billion [1] |
| Western Australia | $4.775 billion [1] |
| South Australia | $3.553 billion [1] |
Recently, homeowners are weighing up whether it’s worth moving their family and paying the expensive costs to sell their home or deciding if renovations would be more cost-effective. The Housing Industry Association (HIA) Chief Economist, Tim Reardon, said in November 2025, “Data released today shows that the value of lending for renovations is almost three times higher than it was pre-pandemic. This growth in renovation work is facilitated by the rise in home prices and low unemployment.” [3]
“The high price of land has seen many households choose to renovate to gain additional space to accommodate a growing family. This has seen renovations activity growing twice as fast as the rest of the economy.” [3]
Cities seeing the most renovation trends
Currently, the trend to renovate is strongest in Sydney and Melbourne. What’s driving the current need to renovate is moving costs. Instead of moving to another home in an expensive housing market and incurring additional costs, such as stamp duty, legal fees, and real estate commissions, Australians are investing their money in their own homes and assets to benefit themselves. [4]
In 2026, the number of renovations in New South Wales has eclipsed other states in the country, with homeowners leaning towards extensions and renovations. And although Victoria has been eclipsed by their neighbours, Roy Morgan research shows that Victoria has claimed the mantle of DIY home capital of Australia, as 42 per cent of Victorians plan a home project. [5]
Meanwhile, in Queensland, some of the most popular renovations and extensions include raising homes to make way for a second-storey, increasing their living spaces, converting garages and adding secondary dwellings such as backyard pods on their properties to gain more income. And across Australia, more families are clearing garages, spare rooms and backyards of untouched clutter to make way for more space. [6]
What Are Australians Renovating?
The most in-demand improvements for Australian homes in 2026 are bathroom renovations, followed closely by kitchen renovations and energy-efficient installations to improve daily comfort around the home. [7]
Between daily usage frequency, high resale value and due to ageing fixtures, bathrooms and kitchens are the top few home renovations that Australians are currently undertaking. Adding more storage, smart technology, and integrated appliances into a kitchen is a big factor for Aussies too, with some even combining kitchen and bathroom projects for a more cohesive and consistent design style across the home. [7]
What Do Renovations Currently Cost?
If you’re looking to upgrade your home or add an extension to your property, it’s worth knowing what this may cost you before you start the process. Keep in mind that home renovations can generally cost anywhere from $1,600 to $3,700 per square metre. [8]
For those renovating, you may consider budgeting around the following figures for each project. Keep in mind that these price ranges are an estimated amount, and every situation is different. To get an accurate quote, consider contacting a licensed contractor for their expert opinion before starting any renovations.
When renovating your home, you should also consider your sum insured amount on your home insurance policy, also known as the cost to rebuild your house. If an insured event happens, such as a fire or a storm, and destroys your home, including your newly renovated kitchen, it could cost more to rebuild it than before.
To help you determine how much you think it would cost to rebuild your home for your sum insured amount, you can use our Home Replacement Cost Calculator tool. We’ve outlined some renovation amounts below that are examples only:
| Renovation type | Cost | Sum insured increase (taking into account 25% in case of additional costs) | Why should I increase my sum insured? |
|---|---|---|---|
| Kitchen | $20,000-$30,000 [9] | $25,000 - $37,500 | New cabinets and a kitchen counter can significantly increase the cost to rebuild your home. |
| Landscaping & Decking | $12,500-$44,500 [8] | $15,625 - $55,625 | Using hardwood timber for decking can add to the overall value of your home and building cost. |
| Bathroom | $15,000-$30,000 [9] | $18,750 - $37,500 | A new bathroom can increase the cost to rebuild your home significantly, especially if you use luxurious materials such as natural stone benchtops and brass taps. |
| Ensuite | $35,000 [9] | $43,750 | Adding an ensuite to your home can also lead to a substantial rebuild cost, which is why it’s worth considering your sum insured amount for adequate protection. |
| Bedroom | $4,000-$6,000 [9] | $5,000 - $7,500 | While bedrooms may be cheaper to renovate, it’s best to ensure this cost is accounted for in your sum insured amount. |
| Living room | $7,000-$15,000 [8] | $8,750 - $18,750 | Expanding your living room with grand or structural changes can also increase your rebuild cost. |
If you’re also buying furniture to put in the new rooms you have added to your home, consider increasing your contents sum insured too. To help you figure out what you think your contents are worth, you can use the Contents Replacement Calculator.
Keep in mind that some renovations, depending on whether they’re premium builds, can increase in price. This means if you’re considering a luxury renovation with expensive materials, you may need to expand your budget.
For kitchen and bathroom or ensuite renovations, these also entail more expensive materials, including purchasing a new oven or stovetop, tiles, and paying for plumbers and electrical work to properly complete a room, which is worth factoring in. [9] Moving internal walls with built-in sinks or ovens can lead to a larger budget, too.
On the other hand, outdoor renovations that use timber can also be expensive when it comes to landscaping and decking work. If you’re hiring tradespeople for this project, it’s best to take into account the current price of hardwood timber and the rising prices. [8] Due to the rising prices, we suggest updating your sum insured amount to reflect the changing costs and avoid underinsurance for your home.
| Renovating has the potential to increase your home’s value — and its rebuild cost. If your sum insured hasn’t been updated to reflect your home improvements, you could be underinsured the moment your renovation is complete. For additional protection, you can add Budget Direct’s optional Sum Insured Safeguard extra to your Home Insurance policy. With this cover, we’ll increase your sum insured amount by up to 25 per cent if your home repairs cost more than your nominated amount to help with extra trade expenses. |
If you’re considering adding an extension to your home, you may need to take into account the factors below. As a general guide, an 80 square metre ground floor extension may cost you anywhere between $160,000 and $320,000. [10]
It may be worth budgeting within each project’s estimated price range:
Insurance When Renovating
Renovating can be an exciting time. Not only are you likely adding value to your home, but you’re expanding your livable space. One of the most important aspects to think about while renovating is your insurance policy and making sure you have the most adequate cover possible. After all, it’s one of the most crucial steps in protecting your valuable asset. To ensure you’re covered during and after your renovations are completed, you can follow the checklist below as a guide:
1. Consider Your Sum Insured Amount
- Review how your renovation or extension may increase the cost to rebuild your home, and how it may affect your sum insured amount
- If you need help updating your sum insured to align with your new renovations, you can use the Home and Contents Replacement Cost Calculators to help you decide what you think your home and belongings are worth
- Remember to keep checking your sum insured amount while you renovate to avoid risking underinsurance
- If you’re purchasing new furniture or recarpeting your home, don’t forget to review your contents sum insured to reflect the new costs
2. Review your insurance cover
- It’s worth checking your policy and the Product Disclosure Statement (PDS) to make sure you understand all possible insurance limitations during your renovation works, such as unoccupied home excess and tradesperson requirements
- Inform your insurer of your renovation plans, ask any questions and clarify your policy cover
3. Verify the legitimacy of your tradespeople
- Check that all tradespeople hold valid public liability and builders’ insurance to best protect your home
- Ensure all building materials are compliant so you receive quality renovation work and long-term structural protection
- Request written contracts for all renovation work
It’s best to ensure that, where applicable, your renovations are approved by your local council, as DIY work that you undertake yourself or from an unlicensed builder may not be covered under your home insurance policy. To protect yourself, we suggest reviewing the Product Disclosure Statement (PDS).
Review your sum insured amount after every renovation. Get a Home and Contents Insurance Quote online.
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