For many homeowners, the timing of a major renovation aimed at expanding your home isn’t something that can be easily put off. A growing family, or the need to look after a parent, is often an immediate ‘driver’ and time is of the essence.
With the recent interest rate rise in Australia – with some predicting another later this year – the prospect of carrying out a major renovation in 2026 now seems more challenging.
However, this changing environment may even be an opportunity to act at a time when some of the usual ‘bottlenecks’ of the Australian construction industry are easing.
And with careful planning and budget management, major projects like second-storey additions and ground floor extensions will transform your home into a space you love that significantly adds long-term value, making it more than a worthwhile investment.
Why Renovating Still Makes Sense in 2026
Sydney’s property market remains strong, and renovation activity continues to be a popular alternative to moving house, especially where demand for space, home offices, extra bedrooms, or multi-generational living is growing.
Homeowners are choosing to invest in what they already own, tailoring their homes to suit changing lifestyles rather than starting over.
This avoids incurring the high costs and time of moving home – like stamp duty – and you don’t have to lose your network of neighbours, schools and more. With a renovation, you get:
- Greater enjoyment of your home – more space, better flow and tailored layout for your needs.
- Enhanced liveability – improvements like open-plan living, extra bedrooms or modern kitchens are lifestyle upgrades you’ll appreciate every day.
- Improved energy efficiency and sustainability – smart design can lower ongoing running costs and even open up incentives or rebates for green upgrades.
- Potential value uplift over time – well-planned renovations and extensions that reflect Sydney lifestyle preferences can increase your property’s market appeal.
Industry Bottlenecks May Ease
Sydney – and Australia generally – has faced skilled tradespeople shortages that caused delays and higher costs in recent years.
However, labour market data suggests that overall workforce pressures have eased somewhat from the extremely tight conditions seen in the immediate post-pandemic period.
And if the recent interest rate rise dampens the demand for renovations from people who are in a position to wait, 2026 may be a small window of opportunity to find builders at a time when they can work with you more immediately.
The Long-Term Perspective on Interest Rates
When interest rates rise, it’s easy to forget that we are moving back to a ‘normal’ range, having experienced emergency low rates after the GFC and then COVID.
Furthermore, the recent rate rise reflects, in part, a stronger economy, and some of the rising costs driving inflation are specific enough that even financial experts like the ABC’s Alan Kohler thought the RBA might not move interest rates at all in February.
Even so, with a more uncertain environment, if you are looking to borrow money to fund a renovation, or redraw from your existing home loan, it’s important that you look at scenarios that include rates going up in the future.
Setting a realistic budget based on what you can afford to pay now and in the future doesn’t mean you have to abandon your plans, just that you may need to compromise on some of the ‘wants’ or ‘nice to have’ features to ensure that all your ‘needs’ remain in the plans that you finalise.
Start With a Clear Vision
Think beyond paint and finishes – imagine how you want to live in your space.
Do you want a second living area? A spacious kitchen for family gatherings? A home office that fosters productivity? Getting clear on why you’re renovating helps shape what you build.
Start to order your priorities and be clear on what are ‘needs’ versus what are ‘wants’.
Consulting with an architect, designer or experienced builder early can help you explore innovative ideas you might not have considered, as well as help you shape your plans into your target budget.
Consider A Design and Construct Builder
Most people think that any major changes to a home must be drafted by an architect, but it is often better to work with a specialist design and construct builder with strong experience in home additions and extensions in Sydney.
These companies use designers who draw up plans that are used both for submission to council and for the build itself, and they understand the local construction costs that can vary from city to city.
As well as saving you time, this can also significantly save your budget.
Using a separate architect can add delays when their architectural plans have to be subsequently turned into plans that the builder can use.
Architectural plans may also be harder to match to your target budget, whereas a designer working for a design and construct builder is constantly checking in with the construction arm to ensure that the plans they are creating with you are realistic and achievable.
Use Smart Financing
Whether interest rates rise or not, it can really pay to consider smart financing options like:
- Refinancing or redraw facilities on existing loans to take advantage of better terms.
- Construction or staged progress payment loans that match cash flow to build stages. This avoids paying interest on funds that you don’t need immediately.
What matters most is ensuring your repayments fit comfortably within your budget and that you understand your borrowing capacity now and into a future where there might be other rate rises.
Stick to the Plan
One of the biggest causes of extra costs and delays in home renovations is changing the scope of your project.
You might think it’s perfectly fine to add extra features or make last-minute adjustments, but sticking to your original plan will save you both time and money.
So, make sure you’ve thought through all aspects of the design. Work with your designer to finalise all the possible details, from materials to finishes, so there are fewer surprises during the build.
In the unlikely event that you really feel the need to make a change, make sure it is absolutely necessary (not just ‘nice to have’) and then talk it through with your builder to thoroughly understand the cost and time being added to your building project.
Looking to Renovate in 2026?
We hope the above advice helps you confidently plan your renovation in 2026, but feel free to call us to discuss your goals and see how we can help.
As a builder of major renovations, Addbuild has been helping Sydney homeowners expand their home for more than 45 years and we love sharing that experience.
We specialise in remodelling, home additions and home extensions, and have unbeatable experience and know-how having completed over 2,000 projects, all in the Sydney area.
Call our office on (02) 8765 1555 or send us a message using our contact form if outside of office hours.
If you are still researching, have a look at our blog, consumer guide to home improvement and masterclass to get further ideas about every aspect of renovating your home.
Searching for inspiration? Have a look at our featured projects and ‘before and after’ photos.