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How much value will a bedroom add to a house?

By George Hadgelias

Most Australian home owners understand that adding a bedroom will increase the value of their property, but by how much exactly?

Cathy Morrissey, known as The Reno Chick, says while a combination of factors ultimately determines the value of a property, adding a bedroom to a house generally adds more to the potential sale price.

But before you break out the tools you’ll need to weigh the potential increased sale price with the costs of construction.

How much value will another bedroom bring?

For a home valued between $500,000 and $1 million can generally add around $50,000 to $80,000 to the selling price, explains Morrissey.

“Generally speaking, that $50,000 to $80,000 figure is accurate, but there are caveats,” Morrissey says.

Adding a bedroom is often an excellent strategy, but it depends on the property, she says.

How much will it cost to add another bedroom?

It can cost between $50,000 and $100,000 to add one, Morrissey says.

As a rough guide, build costs are generally around the $1200 – $1700 per sqm for a home extension. This will depend on the level of construction and whether your home is timber or brick. If your extension is to be built in brick then expect to pay in the upper level of this scale.

If you’re planning on creating another level on top of your existing home then you should expect to pay in the region of $2000-$3000 per sqm.

You’ll also have to adhere to council regulations and pay any permit costs.

Should I add another bedroom?

The simple answer here is maybe, says Morrissey.

“Many people wrongly assume simply adding a bedroom will get them that jump in value.”

If your home is large with few bedrooms

“If you have a great three-bedroom house, with a large kitchen and spacious living and dining areas, and the room to add another bedroom, it can be brilliant to turn it into a four-bedder, as that appeals to a whole different demographic.

A good four-bedroom house is always going to be worth more,” Morrissey says.

If your home is small with many bedrooms

“If you have a tiny three-bedroom house with one bathroom, adding a bedroom, and leaving everything else tiny, won’t work. You’ve just added an extra room onto a tiny house – and it could have cost you $100,000. The addition has to be relative and you have to get that money back,” she says.

Home owners should do their research, Morrissey adds.

“Whether you’re a first-home buyer or an investor, you have to understand what your actual property is worth and how much it will cost to upgrade or adjust it. Will you get a return back? Will you get, at the very minimum, what you spent? These are the question you need to ask and research,” she says.

Know the target demographic too, Morrissey says.

“The market is too generalised. You have to understand the target market instead. Who are you selling to? How much money do they have to spend? What do they want? Make your choices based on that.”

Alternatives to adding another bedroom: The studio or granny flat

If you’ve done the sums and you don’t think adding another bedroom is the right choice, don’t be afraid to consider other options.

Home owners should also think creatively about ways to add value, Morrissey says.

“If you do have a smaller house, rather than spending $50,000 to $100,000 adding a single bedroom, think about how much land you have.

“Could you fit a granny flat? That can be just as appealing to buyers. In the long term, it’s possible that a three bedroom house with a self-contained flat out the back is just as valuable.”

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