How Much Value Does A Renovation Add?

How Much Value Does A Renovation Add?

It’s the age-old question in residential building: how much value will a renovation add to my home? Unfortunately, as with most construction elements, the answer is ‘it depends’. There are a number of factors to consider, and, because of the bespoke nature of the work, there isn’t a one-size-fits-all solution.

Common factors to consider include the type of renovation, whether the work is undertaken during a building boom (higher construction costs, but land is worth more), the strength of the real estate market at any given time and supply and demand within the market. The same renovation in a different suburb, let alone city, can yield a completely different market value.

However, this doesn’t mean you should enter a renovation completely in the dark about its financial feasibility. The key to maximising value of any renovation is simply ‘research’.

If you are driven only by maximising the value add of any renovation, then the first step would be to look at the real estate market for comparative properties.

This would give the best indication of what value your renovated home will be worth, but there will be nuanced differences that would need to be factored in. This exercise should yield a price range of where your renovated property will be, from where its value is pre-renovation.

Of all elements that drive value, the major one is the strength of the real estate market. Most critically, supply and demand factors will have the greatest impact. The issue with instigating a renovation purely to appease the demand of the market at a given time is that the real estate market is cyclical and a renovation that satisfies the market demand today can be very different to market demand going forward.

With this in mind, we always suggest to our clients that they undertake a renovation as a long-term proposition that effectively addresses the brief without seriously over-capitalising on the property. Looking five years plus down the line, if you have initially over-capitalised, it won’t be long before the market value catches up and passes what your property owes you (after renovation, plus what you could fetch pre-renovation).

This is in part influenced by the ever-increasing costs to build, both in labour and materials.

Where you spend your money during a renovation can also influence the end value. There are items that are perceived to add great value and others that, although necessary, don’t translate to adding worth.

The likes of a $30,000 kitchen can easily be correlated with an increase in value. However $30,000 spent on necessary retaining walls doesn’t necessarily translate to adding the same value.

Therefore, it’s essential that your chosen architect and builder work together to introduce a clever design that gets the best out of your existing property, mitigating excessive engineering while not compromising on the flow and function.


Should you be considering a renovation in Brisbane, get in touch with the Linear Design + Construct team. We can advise you on renovation feasibility, ensuring you receive the most value from your project.