How much value does a bedroom add to a house?

author-avatar By
on May 05, 2022 Fact Checked
How much value does a bedroom add to a house?

When it comes to your property’s worth, size does matter. But how much value will you see added by adding a new bedroom?

If you’re looking into ways to increase the dollar value of your home, adding a bedroom could be a good option. Before you decide that it’s the right move, it’s important to figure out the logistics; its size, where it will be situated, and ultimately, whether it’s going to end up being worth it.

As you can imagine, adding a bedroom to your house will cost money. Not to mention home renovations - especially with building shortages and delays - can take quite a while. It’s important to weigh up whether the increase in your home’s value will outweigh the costs of adding it.

In this article…


Advertisement

Building a home? This table below features construction loans with some of the lowest interest rates on the market.

Lender

Variable
More details
GET A DISCOUNTED GREEN RATE
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
GET A DISCOUNTED GREEN RATE

Green Construction Home Loan (Interest Only)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Variable
More details
FREE REDRAW FACILITY
  • Pay more to reduce the amount of interest you pay
  • Easily access additional funds in your redraw
  • Great rates and low fees
FREE REDRAW FACILITY

Basic Investment Loan (Principal and Interest) (LVR < 60%)

  • Pay more to reduce the amount of interest you pay
  • Easily access additional funds in your redraw
  • Great rates and low fees
Variable
More details
BUNDLE YOUR HOME LOAN AND YOUR INVESTMENT LOAN FOR MORE SAVINGS
  • Pay more to reduce the amount of interest you pay
  • Easily access additional funds in your redraw
  • Great rates and low fees
BUNDLE YOUR HOME LOAN AND YOUR INVESTMENT LOAN FOR MORE SAVINGS

Yard Investor Bundle Loan (Bundled with Home Loan)

  • Pay more to reduce the amount of interest you pay
  • Easily access additional funds in your redraw
  • Great rates and low fees
Variable
More details
100% FULL OFFSET ACCOUNT
100% FULL OFFSET ACCOUNT

Offset Package Home Loan (Principal and Interest) (LVR < 60%)

    Variable
    More details
    100% FULL OFFSET ACCOUNT
    100% FULL OFFSET ACCOUNT

    Offset Package Home Loan (Principal and Interest) (LVR 60%-70%)

      Variable
      More details
      AN EASY ONLINE APPLICATION
      AN EASY ONLINE APPLICATION

      Yard Investment Loan (Principal and Interest) (LVR < 80%)

        Variable
        More details
        GREAT FLEXIBLE LOAN OPTIONS
        GREAT FLEXIBLE LOAN OPTIONS

        Basic Home Loan (Principal and Interest) (LVR 70%-80%)

          Variable
          More details

          Yard Investment Loan (Principal and Interest) (LVR > 80%)

            Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 26, 2022. View disclaimer.


            How much value will adding a bedroom add to your home?

            We’ll start off with the million dollar question (figuratively and possibly literally): how much will your home’s value increase by adding another bedroom? Unfortunately, there’s no simple answer to this question. It will all depend on a range of factors.

            Bernadette Janson, host of She Renovates podcast, said adding a bedroom can add a lot of value depending on your home’s location, as well as the configuration of the existing house.

            “It is way more profitable if you can do it in the existing floor plan so that the cost is minimal,” Ms Janson told Savings.com.au.

            “You could utilise an obsolete dining room, split an overly large bedroom into two, or convert a garage into a habitable space.”

            She said that converting a studio apartment into a one bedroom apartment is a way to significantly increase your home’s value.

            “We turned [a] studio into a one bedroom apartment, which increased its value from $475,000 to $670,000,” Ms Janson said.

            “[However] once you get over four bedrooms, the potential for adding value may diminish.”

            1bed.jpg

            Studio apartment turned into one bedroom apartment by Ms Janson, image supplied

            Location, location, location

            Like with property in general, location can be a big factor, which makes providing blanket value estimates tougher. For example, if you’ve done your research, you might discover the investment home you’re renovating is close to schools, parks and other family-friendly amenities. This means a growing family might appreciate a three bedroom home much more than a two bedroom one.

            Estimates from the Real Estate Institute of Victoria (REIV) revealed an extra bedroom could add anywhere from $160,000 to $500,000 to your property’s value. But property investment expert Andrew Crossley said an extra room could increase house prices by an average of $95,000. Clearly, it depends on a range of factors - but location is a big one.

            How much does adding a bedroom cost?

            The cost of adding a bedroom will vary depending on the size of your house and block, where the room will be added, how big it will be as well as the materials and labour that will be used.

            Unfortunately, the cost of adding a bedroom is like calculating the costs of renovating; it all depends. But to give you a rough estimate, the Architecture Cost Guide said the average cost of adding a room to your house is between $1,900 to $3,400 per square metre.

            According to BuildSearch, the average bedroom size in most new homes in Australia is 3.2 metres by 3 metres, which is 9.6 square metres. This means you’re looking at anywhere from $18,240 to $32,640 to add your standard bedroom. If you’re looking at adding a master bedroom (not to mention an ensuite), you’d be looking at a bedroom that’s, on average, 16.38 square metres. This means you’re looking at a potential cost of $31,122 to $55,692.

            The cost of adding a bedroom can also vary depending on whether your home has been built or not. For example, if you’re building a new home and thinking of tacking on another room while you’re at it, the cost of doing so may be different.

            According to Specifier, a basic floor extension (which includes adding another room) might add another $25,000 to the cost of building your new house. This includes the cost of building and labour materials, as well as council approvals and design plans. But if you’re looking to add a larger area like a bedroom or bathroom, you could be looking at an extra $40,000 to $55,000.

            Ms Janson said that one of her students converted their garage into a bedroom while renovating their entire home. They transformed their house from three bedroom home with one bathroom, one living room and a garage to a four bedroom home with two bathrooms, two living spaces and a carport.

            “The cost of the garage conversion was approximately $50,000, but whole renovation was $180,000. The value of the house increased from $540,000 to $990,000.” she said.

            This means that the home’s value increased by $450,000. Only factoring in the renovation costs, this means they made a $270,000 profit.

            How to add a bedroom to a house

            You have a few options when it comes to adding a bedroom to a house. Depending on your situation, you may be limited to only one suitable option, or you may have two to choose from.

            Adding to your new build

            As we mentioned, if you’re thinking of tacking on another room while your house is being built, the process of doing so will be different. You’ll need to speak to your designer/architect, builders and so on and let them know that you want to add another bedroom. If you have enough space, time and the budget to do so, your designer/architect will need to alter your building plans.

            You’ll likely need to go back to your local council and get approval for the new bedroom, which may delay the building process. Your builders will likely need to source new building materials, account for the extra time needed for the project and so on. There will be a lot of other logistical stuff to work out, so take this explanation with a grain of salt.

            Adding to your existing home

            If you’re adding a bedroom to your existing house, you’ll be looking at two main options: dividing an existing room, or a basic floor extension. One of these options will be much more expensive than the other (take a guess).

            Depending on your home as it stands, you may only be able to look into one of these options. For example, if there are no rooms in your house that you could reasonably divide or alter, you may be limited to extending. On the other hand, if there’s no room on your block to extend to your house, or you don’t want a two-storey house, you may need to look at altering its existing structure. If neither of these options work, adding a bedroom to your house may be off the cards.

            Dividing or altering an existing room will be cheaper than the alternative, but it may not see your home’s value increase as much as you would extending. This is because the size of your home isn’t actually increasing. Regardless, adding another bedroom to your home as it is will likely be a lot simpler, as you may not need to go to your local council and seek building approval (but it’s always best to double check). From here, you’ll still probably need to speak to some designers/builders to get the ball rolling.

            There are also options when dividing a bedroom where you don’t actually need to build. For example, you can install a temporary half wall, a sliding barn door, a room divider. But this won’t actually count as adding another bedroom to your house when it comes time to sell - it’s merely functional.

            If you’re looking at extending your house, this is going to be a much lengthier and more expensive process. As we briefly mentioned, you’ll need to do a basic floor extension, which involves knocking down existing walls and laying new foundation. If you’re thinking of extending upwards, as in adding a second storey to your home, you’ll also need to check that the foundation can handle the extra weight.

            Either way, you’ll need council approval before you start, as well as builders, a designer or architect to name a few. Extending your home is a long-winded, complicated, expensive project that needs to be looked into thoroughly.

            Pros and cons of adding a bedroom to a house

            Whether you’re changing up your building plans or adding onto your beloved family home, adding a bedroom to your house has its pros and cons. Before you decide it’s the route for you, let’s discuss a few.

            Pros of adding a bedroom

            Cons of adding a bedroom

            Increased house value: As we’ve mentioned, adding a bedroom to your house could increase your house’s value by hundreds of thousands of dollars.

            It’s expensive: Also mentioned above, adding a bedroom is going to cost you anywhere from $18,000 to $55,000 or more. If you don’t have this cash lying around, you may need to take out a construction loan or dip into your equity.

            More space: Another big pro is you can have more space in your home. Whether it becomes a man cave, or teenage getaway, having extra space is always a bonus.

            It may take a while: Depending on what you’re doing, it may take a while to add a bedroom to your house. Especially with all the current building and material delays and shortages, you could be looking at anywhere from a few months to years from start to finish.

            Design it how you want: Maybe your master bedroom is too open, or maybe it’s next to a main road and it’s noisy. Regardless, adding an extra bedroom gives you the flexibility and choice to design it however you want.

            May not be worth it: It takes time, it takes money; you may need to do some calculations to determine whether it’s actually worth doing. Most of the value of your property is in the land (generally speaking), so make sure it’s going to be worth your while.

            Things to consider when adding a bedroom to a house

            If you’re thinking about adding a bedroom to your house, there are some things you should consider to guide your decision making.

            Understand your suburb’s demographics

            Do some research into similar houses to your own to see how much they’re worth. Once you’ve got an idea, do some research into houses with an extra bedroom. This can give you a good idea of the demand for houses with and without that extra bedroom as well as how much your home may end up being worth.

            “Check the suburb profile on realestate.com.au,” Ms Janson said.

            “It’s not definitive but it will give you some indication [of similar homes' values] that you can further research.”

            Maintain the balance

            Ms Janson said once you start adding bedrooms, it’s important to keep the balance between the number of bathrooms, living rooms, and so on.

            “Once you get to four bedrooms, you need to have at least two living spaces,” she said.

            “As for bathrooms: two bedrooms need one to 1.5 bathrooms; three bedrooms need one to two bathrooms; four bedrooms need 1.5 to two bathrooms.”

            Beware of overcapitalising

            Budgeting your new bedroom addition is important to ensure you’re not overcapitalising. Overcapitalising means you’ve spent more on the renovations than what you’ve seen returned in increased value/profits. It’s important to work out the costs and a general estimate of how much value your home will increase by to ensure you don’t overcapitalise, and whether adding a room will really be worth your time and money.

            Speak to a local real estate agent

            Another way to get an understanding of your house's value pre and post room addition is speaking to a local real estate agent. An agent will be able to advise on the type of properties in the area, the types of buyers coming into the area and what’s selling well right now. From there you can gauge if adding an extra bedroom is worth the effort and cost.

            Financing options

            Adding a bedroom to your house will generally cost you a significant chunk of money. Look into a few options for funding your renovation project before you get started - whether that’s a construction loan, personal loan, or home equity redraw is most suitable will be up to you.

            Explore alternatives

            If you’re looking to add value to your home, adding a bedroom may not be your only option. You may want to look into other options before settling on a home extension. You could consider a cosmetic or structural renovation, adding a garage or shed, or something else to spruce up your place. If adding a bedroom won’t be worth the time and money, there are other ways that you could make your home’s value go up.


            Image by Spacejoy on Unsplash

            Disclaimers

            The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

            Latest Articles

            author-avatar
            Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

            Be Savings smart.
            Subscribe for free money newsletters.

            By subscribing you agree
            to the Savings Privacy Policy