Is it a good idea to extend your home?

Sometimes a new set of curtains or carpet simply isn’t enough. Sometimes, it’s time to pull out the big guns and extend. But how do you know you’re not about to overextend? Do you know the costs and the benefits? Read on, and we’ll outline what you need to know.

How much does an extension cost?

Refresh Renovations provides an estimate of between $60,000 to $200,000 for a ground-level extension for a home, including materials, labour, plans, consents and project management—quite a range!

But before you get scared off by the upper end of that estimate, they go on to explain that a one-bedroom extension would be on the lower end of the scale: about $60,000.

Of course, your exact quote will change significantly depending on where you are, how you are looking to extend and what materials you opt for, but this provides a ballpark figure for renovators. Your building team will be able to provide a more accurate quote, but remember: always budget between 10 and 15 per cent extra for those inevitable unforeseen costs.

How much value does an extension add?

In an interview with Westpac, Gordon Edgington of Prendos Valuers explains that “often cost doesn’t add value when doing extensions”.

“You might spend $3,000 per sqm or more adding a room or extending, but it might only add $1,500 or $2,000 per sqm in value,” he says.

The key to figuring out the balance is to remember that it depends on the type of home you are selling, location and who it could appeal to.

If you have a two-bedroom residential house, adding an extra bedroom could make it appeal more to small families; doubly so if you’re already in a highly-sought-after school zone. Were this to be an investment property, it would also significantly increase the landlord’s rental yield.

However, the same could not be said for a four-bedroom lifestyle or rural property: is five bedrooms really going to make that much of a difference to the value of the home in the eyes of your potential buyers? Are they likely to need a fifth bedroom?

Read more: Renovations that add value from inside out

Do you really need to extend to get value?

Extensions are not the only way to add value to your home—and we’re not just talking about a repaint (though you certainly shouldn’t sniff at that).

Simply rearranging and opening up your already existing layout could increase your value to the same extent as an extension, without the added footprint to the house or cost to your wallet.

Turning a home open plan is a classic—though broken plan is making a resurgence too. Opening up an unused office to expand a master bedroom is another possibility, or even converting a storage room into whatever you’re missing: walk-in wardrobes, ensuites and compact laundries are common choices.

Remember that the home has to be in balance: a property with an enormous living room and tiny bedrooms with little or no storage is certainly unique, but also rather off-putting for the average buyer.

Other considerations

Before choosing to extend, ask yourself these questions:

• Do you have enough equity in the property for extending your loan?
• If you’re living in the property, will it be disruptive? It may be better to build offsite to save time / inconvenience.
• How will your extension impact the flow of the house / other rooms?
• Will you make a return on your investment?

Your answers will help guide you towards whether it’s right for you to extend your home: either for maximum value, or for your own personal enjoyment.

Want to know more about getting more value out of your home renovation? Check out our free guide here!