Top 3 Home Improvements That Increase Home Value Based On Data

Making improvements to your home is a great way to add value, but not all home improvement projects are created equal. Rather than guessing on where to invest your money, or taking the advice of the “so called experts”, we’ve compiled a list of the top 3 renovation improvements that increase home value the most, based on data from, Real Estate Institute Australia, and local real estate agents.

Use this data to your advantage, and make your home more valuable and more appealing to buyers at sale time.


Top Home Improvements That Add Value – Average Resale Increase

These are the top renovation, remodeling, and home improvement projects that increase home value based on recent home sales data. We assume the median home price in each market, to average dollar and percentage release increase value.

Home improvement Project Average Resale Value % Increase Average $ Resale Increase
Adding An Additional Bedroom
6% - 8%
$60,000 - $95,000
Adding New Or Renovating Existing Bathroom
New - 5%
Existing - 3%
$40,000 - $60,000
Remodeling The Kitchen
3% - 5%
$50,000 - $85,000
Note* – these figures are based on the median house prices in Austrailia

Let’s jump into each of these projects, and find out why these home improvements are trending as the highest return on investments for home owners.

1. Adding An Additional Bedroom

In general, bedrooms demand a higher home sales price, but now with living space being at a premium, adding an additional bedroom is a wise investment, and one that increases the value of your home by up to 6%. Obviously, this varies based on the demographics of those who own homes in the area. If your area is populated by families, adding an extra bedroom to a two-bedroom home will most certainly help you see these kinds of returns.

On the other hand, if you’re looking to rent out your home in an area populated by mostly first home buyers, then adding an extra bedroom might not be as profitable.

Typically, an additional bedroom can be added if you have the additional space, or you can keep construction costs down by renovating an existing office space, or larger garage space. The latter could be a smarter, low risk, low-cost option, if you decide adding an additional bedroom is the way to go.

Lastly, remember to use quality tradesmen and material. If your add-ons are lower quality than the rest of the house, you may find this could decrease your home’s value instead of increasing it.

Average cost of adding an additional bedroom – $40,000
Average resale increase – $60,000 – $95,000

2. Adding New or Renovating An Existing Bathroom 

Second to adding an additional bedroom, the bathroom is the most profitable room to renovate in the property, and therefore should be on every home owners list when it comes to renovating.

If you have the space, adding an extra bathroom to your home is a great way to add value. An extra bathroom gives your family more convenience, especially if the bathroom is added as an ensuite to an existing bedroom, and can make your home more attractive to potential buyers.

However, if you don’t have the room, nor the funds to add an additional bathroom, modernising an existing bathroom/s, can also increase the value of your home. Turning old bathrooms into a more fresh and functional space, can attract buyers and lead to a higher selling price. Data from home sales in the last 12 months shows that homes with an extra bathroom sell for about 5% more, and homes with freshly renovated bathrooms fetch up to 3% more.

Average cost to add a new bathroom – $50,000
Average cost to renovate an existing bathroom- $25,000 – $35,000
Average resale increase – $40,000 – $60,000

3. Kitchen Renovation 

For many families, the kitchen is the heart of the home. It’s a space where food is prepared as family members catch up and socialise. Modern kitchen designs are trending, as home buyers are looking for kitchens that are functional, fitted with the latest appliances, and have large storage space.

If a full kitchen remodel is out of your price range, we’ve created a list of top priorities you should consider when investing in a kitchen remodel.

  • Adding an island – A kitchen island comes with multiple benefits such as extra working space, and with the addition of seats or stools, it provides a dining and living space.
  • Taking storage spaces to the top – This frees more storage space on the floor and adds room for additional appliances.
  • Upgrading the bench top – This is usually the first thing buyers look for when assessing the kitchen. Upgrading to a higher quality stone, will instantly draw the eye and give appeal.

According to sales data, homes with renovated kitchens sell for about 3%-5% more than homes with kitchens that are outdated or have a hint of despair.

Average cost to upgrade kitchen – $30,000 – $50,000
Average resale increase – $50,000 – $85,000

How To Choose Home Improvements With The Best ROI?

It’s important to remember that “adding value” is not the same as return on investment (ROI).
Understanding how much a project could add to the resale value of your home, the second is understanding the cost of the project.

This means you need to consider trade costs, materials, delivery fees, etc. There are various websites you can use to find out what the average cost is for each remodeling project listed above, that takes into consideration the latest pricing and inflation rates.

Estimating the value-added before taking on a project makes it easier to negotiate with contractors, and understand whether it’s money and time well spent.

You’ll also want to consider how much you’ll enjoy the upgrade yourself. This could also sway your decision, even if the projected ROI isn’t what you hoped for.



    • It’s easy to start thinking… “Adding an extra bedroom can increase my home’s value by 6%, I’m going to add two.” Unfortunately, many projects can have diminishing returns, meaning the more you add doesn’t mean the more value you gain.
    • Your location, current home value, and trends within your area are important factors to consider when deciding on which project will create the most value.
    • When deciding, remember to consider the value you will receive from the upgrade. This could affect your decision on which project is going to bring you the most value personally and in terms of dollars.
    • Talk to local real estate agents in your area to get a feel for what buyers are looking for, which can help you prioritise which project you want to take on.


In Conclusion

Making home improvements is a great way to add value to your property. However, it’s important to consider all the factors involved before embarking on a project. With a little bit of planning, you can be sure to choose the right project that will offer the best return, whether you’re looking to sell in the near future or not.

If you’re considering a renovation project to add value to your home or personal life, we can help.

We are a Melbourne based Home Renovation Company with over 30 years of experience in the industry. We pride ourselves on workmanship and specialise in the following:

Kitchen remodelling
Bathroom renovations

Our team of experts are here to help you every step of the way, from design to completion.

Get in touch today for a free consultation or contact us directly on 0438 327 088

From Guido and the team at RBC,
Happy renovating!