Do you upgrade the bathroom or add a snazzy new pool? When it comes to increasing the value of your property, it seems not all improvements are created equal.
Making regular improvements to your home and maintaining it in good condition is the best way to add value over the long term. But adding a pool or a second storey can be costly gambles that do little to boost the value of your property come sale time, according to the experts.
In his book, The Ultimate Guide to Real Estate, John McGrath argues that pools do not add any value. "Trouble is, a lot of buyers don't want pools," he writes. "Pools require costly and time-consuming maintenance, and there are child safety issues. That doesn't appeal to a lot of people."
The same applies to second-storey additions, McGrath adds. An extension is less expensive — so you are more likely to recoup the cost — and shows the potential of the property in a better light.
Lou Rendina, managing director of Rendina Real Estate in Melbourne, says the two most important rooms in the home when it comes to adding value have traditionally been the bathroom and kitchen — but that's changing. "The versatility of the living and entertaining areas are an increasingly prominent focus for buyers," he says.
"Building a deck is a good first step, but having it linked to the main living areas, covered and complemented by a gas-mains barbecue, ceiling fans, heaters, café blinds, speakers and TV are completing the indoor-outdoor experience.
"If done properly, it's like having another room that can be used year round."
Another shrewd way to increase the value of your home is to improve its energy efficiency, which will appeal to a broad spectrum of buyers as well as saving you money while you live in the home.
"Upgrading heating and cooling systems, double glazing and insulation are ways of reducing your carbon footprint and utility bills now and well into the future," Rendina says.
Eileen Carroll, an agent with Ray White Glebe in Sydney, advises against a full-scale renovation for the sole purpose of securing a higher price when you sell. "If you're doing the renovations for yourself, that's great," she says. "But a lot of buyers are looking at doing their own renovations to suit their taste."
Carroll argues there are more cost-effective ways to add value than a total renovation — such as landscaping, ripping up carpets and polishing the floorboards, painting the interior and exterior, and presenting your home in "the best possible light".
In his book, McGrath proposes skylights as "a great way to boost the value of your home without spending a lot of money". He also advises updating floor coverings, whether it's steam cleaning existing carpets or revealing and polishing the floorboards.
Rendina also stresses the value of skylights, particularly in period homes that are less likely to enjoy natural light. "The addition of Velux windows or skylights can cast your home in a new light, literally," he says.
"As a rule of thumb when selling, we recommend that any improvements you make should return at least three times what they cost. And this rule applies equally to owner-occupiers. So the addition of a garage door for off-street parking may cost $5000, but it will add considerable value to a property where parking is scarce.
"Likewise, transforming your little-used dining room into a theatre room, kids' play room or office/media room can work wonders as the emphasis on work, rest and play continues to shift even more towards informal living."
