It is easy to assume a $50,000 kitchen adds $50,000 to a home's value. In practice, a valuer does not add up the invoices. They ask a different question: how does this improvement change what a typical buyer would pay for the whole property in this location? That distinction explains why some renovations pay back well and others do not.
How a Valuer Looks at a Renovation
Valuers compare your property with recent sales of similar ones. If your renovated home is similar to others that have sold in good condition, the work is reflected through that comparison. They consider the quality of the work, whether approvals are in place, the property type, the location and current market conditions. The value the improvement contributes is judged against the whole, not by its cost.
Published estimates of what kitchen and bathroom upgrades return vary widely and are rarely backed by a stated method. Many commentators suggest that a substantial renovation often returns less than its cost, while cosmetic refreshes can recover more of what you spend, and the figures differ by suburb and market. Treat any single percentage with caution and ask a valuer about your specific property.
Over-Capitalising
Over-capitalising means spending more on a property than the market will reward. It usually happens when a high-end finish is installed in a street where most homes sell at a much lower price point, or when the owner's taste is highly personal. A feature can be worth a lot to you without raising market value by the same amount. The ceiling is set by what buyers in that area pay for the best homes, not by what you spent.
Why Buyers Discount for Work They Must Do
The reverse also applies. A tired kitchen or an outdated bathroom can lead buyers to discount their offers, and often by more than the likely cost, because they allow for effort and uncertainty. Fixing visible defects, such as damp, peeling paint, failing floors or a worn roof, can remove those discounts. Deferred maintenance is a common reason a valuation comes in lower than an owner expects.
Unapproved Building Work
Approvals matter more than many owners realise. Where improvements were built without the required council approval, valuers may exclude them from their assessment, or the market may respond to the uncertainty surrounding them. In practice that can reduce value and, as a result, borrowing capacity. Unapproved work can also affect insurance and complicate settlement. Selling a home with unapproved work is not necessarily illegal in every state, but the practical effects on valuation and finance can be significant, and the rules differ from state to state.
Before you renovate, check whether you need council or private certifier approval, keep the approval paperwork, and obtain completion certificates where required.
Which Improvements Tend to Be Recognised
- Work that fixes defects. Repairs to roofing, drainage, wiring, plumbing and structural issues remove deductions a valuer might otherwise make.
- Well-built kitchens and bathrooms that match the standard of the street and are properly approved.
- Additional floor area that is approved and fits the local market, such as an extra bedroom or living space.
- Functional outdoor areas that suit the property type.
Whether any of these adds value in your case depends on comparable sales, so treat this list as a starting point rather than a guarantee.
Documentation Helps
Keep invoices, plans, permits, certificates and before-and-after photographs. When a valuer inspects, these records show what was done, when and to what standard. Some work cannot be seen on inspection, such as waterproofing or electrical upgrades inside walls, and documentation is often the only proof.
Before You Spend: A Short Checklist
- Look at recent sales of renovated and unrenovated homes in your street.
- Decide whether you are renovating to live in or to sell. The answer changes how much finish is sensible.
- Confirm approvals before work starts.
- Obtain a valuation before and after major work if the numbers matter, for example when refinancing.
To see how your improvements might be viewed, speak with our valuation team or read our guide to understanding a valuation report.
