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How to Ensure You Don’t Overcapitalise on Your Home Renovation

When you renovate your home, the value of the property should go up. However, it is possible to overcapitalise on the value of your home. Over-capitalisation occurs when you renovate your property to the extent that the amount you spent exceeds the amount you can recoup in a sale or what the property is worth. There are ways to avoid this, such as knowing the value of your suburb and neighbouring properties, as well as keeping to your budget.


Know the value of your neighbourhood

Property values rise and fall however, there is always an average value of the suburb you live in, as well as the neighbouring properties around you. If you overcapitalise on the value of your home, you will struggle to sell your home at the price you want if the value is higher than the average home in your neighbourhood. You also need to consider the buyers of homes in your neighbourhood. Putting in a pool in a suburb far away from the beach might be a good investment, but in small inner city homes, a pool might drive away buyers.


Identify needs vs. wants

If you’ve spent a lot of time planning your renovation, your emotional investment in the renovation might cloud your judgement when deciding on features to include. Be clear on your plan and try not to change it once the renovations have commenced. It is also worth comparing those plans to other houses in the suburb. If you aren’t planning to sell straight away, include features that will improve your lifestyle as well as add value to your home.


sometimes over capitalising is ok, it’s a positive choice you make for the convenience of staying where you love to live and enhancing your families surroundings.


Gather the right team

A key part of this process is the renovation builder you choose. Look for a builder with a great track record and examples to prove it. The builder should hold all legal certifications and customer testimonials for you to read. Don’t attempt to do these renovations by yourself as it could end up costing you a lot more to fix if you don’t have the skills or expertise.


Supa Group has over 40 years-experience performing ground floor extensions, second story extensions and renovations Melbourne wide. Contact us to find out more about our home renovations services.