Renovation costs have increased only 1 per cent in the last quarter, according to the latest cost guide released recently by Archicentre, the building advisory service of the Australian Institute of Architects.

Archicentre's Victorian State Manager David Hallett said that renovations are likely to increase iconsiderably in 2010, with more baby boomers than ever renovating their family home both for lifestyle reasons and to increase its value.

There is also an increasing trend towards alternative construction systems such as lightweight materials and low embodied energy, which can eliminate some trades and offset cost increases in other areas.

"Balanced against this is that we are now seeing a shortage of suitably skilled tradespeople in some areas of the building industry, resulting in some price increases in labour due to the substantial increase in construction activity from the Government's stimulus package in schools, health and first home buyers areas," Mr Hallett said.

"Whilst renovation costs at this stage are remaining reasonably static the major challenge for renovators and owner builders is to ensure that they get the design of the renovation correct to ensure it delivers a sustainable lifestyle on budget."

The guide shows that for new houses and major renovations, the cost structure is approximately 46 per cent on materials, 33 per cent on labour and 21 per cent on fees, levies, permits, taxes and GST.

"The cost will vary for country areas adding 5 per cent to 15 per cent to the renovation," he said.

Mr Hallet advised that the original design process and material selection, which provides the vital information for costing and managing the budget, is the foundation for a successful and financially rewarding renovation.

The Summer Cost Guide gives the following estimates:

Bathroom (ensuite is less) $9,588 - $24,990
Kitchen $10,608 - $31,722
Laundry $4,182 - $9,894
Bedroom $4,080 - $8,466
Single Room 20m2 $4,794 - $10,302