Nearly half of renovation professionals are anticipating a good or very good year in 2023, despite being cautious about the overall economy, according to the 2023 Houzz UK State of the Industry report. Rising costs were a big challenge in 2022, and many firms expect high costs to continue in 2023. However, more than half of firms predict an increase in demand for their services this year.
“Professionals in the home renovation and design industry have a moderate outlook about business activity in 2023, despite concerns around current economic conditions. Though less prevalent than last year, more businesses anticipate revenue growth,” Houzz staff economist Marine Sargsyan says. “The 2023 Houzz State of the Industry [report] reveals that professionals are willing to implement a diverse combination of marketing, financial and customer-centric strategies to achieve their business targets amid high overhead and materials costs.”
Read on to learn more about what renovation pros predict for 2023, as well as how their businesses performed last year.
How was business for renovation professionals in 2022?
Around 49% of those who took part in the survey saw an increase in gross revenues last year, while 33% reported a rise in gross profits.
Design and build firms were the most positive, with 31% saying revenues were above expectations. In fact, 58% of design and build firms reported an increase in gross revenues, with interior designers coming in slightly behind that at 54%, while 46% of architects also saw a rise.
What were the biggest challenges last year?
Rising costs were a big issue for the renovation firms we surveyed, with 82% reporting a rise in the cost of doing business. This increase affected 63% of architects, 85% of interior designers, and 92% of design and build firms.
Consumers being overly concerned about costs was also a big issue, as 41% reported this as a top challenge in 2022. For interior designers, the biggest challenge was consumers having unrealistic expectations, with 32% citing this as a major issue.
How do renovation professionals feel about the year ahead?
42% of the survey respondents have a neutral outlook for the year ahead, while 40% say they expect a good or very good year. On the other hand, 15% predict a poor year.
Design and build firms were the most optimistic again, with 62% forecasting a good or very good year, followed by interior designers at 48%.
What improvements and problems do renovators predict for 2023?
Despite 66% of survey participants forecasting a negative outlook for the national economy, 44% are expecting a rise in gross profits.
More than half of firms surveyed are predicting a rise in demand for their services in 2023, with almost three-quarters of design and build firms predicting an increase.
Problems that professionals point to include overhead costs and the price of materials, both of which approximately 60% of respondents predict will worsen.
How do renovation professionals intend to grow this year?
For the majority of respondents (67%), the focus will be on bringing in larger projects this year. This is of particular interest to architects and interior designers, at 70% and 71% respectively.
Marketing and sales will also influence strategy, particularly for design and build firms and interior designers, with 88% of the former and 76% of the latter saying they will increase their efforts in this area. For architects, staff productivity is of interest, as 60% told us they’d like to improve this in 2023.
The design and build firms we surveyed are also planning to increase their prices, as 88% said they’d focus on this strategy.
