Home Renovations: Are You Adding Value or Overcapitalising?

Renovating your home is an exciting endeavour but, overspending on a renovation? Not ideal. We’ll define overcapitalisation and inform you of the best ways to avoid it so that you can embark on a renovation that adds value to your property and leaves you in a better financial situation.

Renovating your home is an exciting endeavour but, overspending on a renovation? Not ideal. We’ll define overcapitalisation and inform you of the best ways to avoid it so that you can embark on a renovation that adds value to your property and leaves you in a better financial situation.

What does ‘overcapitalisation’ mean?

Overcapitalisation occurs when you improve your property beyond its resale value. This means you’ll make less money on the sale of your home than you put into your renovations. Whether you're renovating your current home or renovating to sell straight away, there are real steps you can take to mitigate this issue:

Know what your property is worth

Get familiar with the value of your property. Select a qualified real estate agent to assess your home so you know how it compares to similar properties on the market. Find out what other homes in your area are selling for and which ones have been recently renovated. This will help you get a clearer picture on how to add value to your home with the right renovations.

There are several things to consider when renovating a house for investment purposes, including tax implications. If you’re buying a home to renovate as an investment, click here to learn more about what the changing tax legislation could mean for you. 

Plan a renovation budget and stick to it

Come up with a realistic budget for your renovations. Speak with friends, neighbours, or family who have recently renovated so you can gather a ballpark amount. We also recommend speaking to an expert in the field, like a Renovation Consultant, to help you hone that budget and make a plan that accounts for any unexpected expenses. 

Think about the future of your property

If you plan to live in your home for a while after the renovation is complete, you want to make sure these changes to your property reflect your style and needs. Keep in mind that certain renovations will appeal to a greater number of potential buyers while other home improvements won’t be seen to add as much value. For instance, adding a pool is expensive, but it’s not a feature that everyone wants on their property due to maintenance. In this case, a bigger ‘money maker’ renovation could be the kitchen or bathrooms.

Choose Refresh Renovations West Auckland to help you renovate

Lean on expert knowledge to plan and execute a successful renovation. Our qualified Renovation Consultants in West Auckland are available to guide you through your renovation process from the ideation phase all the way through to the final inspections. Working with Refresh professionals can ensure you stay within your budget, renovate according to your desired design and layout plan, and have access to the best network of reliable builders and suppliers. Our Renovation Consultants serve as project managers who will oversee your project from start to finish to ensure your renovation runs smoothly and that you avoid blowing your budget.

Timber kitchen with hanging pendant lights

Ask these questions before you renovate

In order to add value to your home through renovations, ask yourself the following:

Which areas of my home need renovating?

If you’re renovating a house on a budget, plan with necessity in mind. The rooms that see the most wear and tear in a home are the kitchen and bathrooms. These areas also add the most value for your money.

And if you’re renovating to sell, take another look at your front and rear gardens. You’ll want to ensure they’re in good shape because first impressions do count for potential homebuyers. 

How much should I spend on renovations?

Generally speaking, 20% of your home’s total value is a good amount to spend on your renovations. You don’t need to spend more, especially if you’re looking to make money back in return.

You might also want to browse our fast five tips to increase the value of your home and plan your renovation.

Want to know more about how we calculate costs or provide cost estimates for renovations? Check out our guide.

What are your current and future needs?

Do you plan to stay in your home long-term or sell straightaway? This answer might dictate the amount you plan to spend on your renovations, as well as the kinds of renovations you want to move ahead with.

Some renovation styles are more long-lasting than others. To be safe, you might want to stay away from niche or trendy renovations to ensure your home will be appealing on the market for years to come.

Would it be cheaper to buy another home instead of renovate?

While renovating can add great value to your home, it’s not always the best answer for every homeowner. Assess your budget and the costs involved in planning a renovation. Compare that figure to other homes on the market and make the choice that will best suit your financial situation.

How do I choose a renovation company?

For complicated and involved renovations, don’t rely on DIY. Instead, choose a reliable, professional renovation company like Refresh to help. Aside from project management experience, a great renovation company will be in-the-know when it comes to local building codes and regulations. They’ll also be able to help you plan a budget and source the best contractors in your area. 

Get inspired by exploring a few of our recent projects below:

Nature-inspired renovation in Parau

  • Spacious farmhouse kitchen expansion
  • Vibrant tile splashbacks in each bathroom
  • Clever window installations

Dramatic villa renovation in Te Atatu

  • Playful patterned wallpaper throughout the home
  • Modern, efficient kitchen design
  • Innovative lighting solutions 

Charming house renovation in Titirangi

  • Transformed kitchen and dining area
  • Unique customisations, like pot rack and feature lighting
  • Brand new cork flooring

Full home transformation in Onehunga

  • Time-sensitive renovation completed just in time for this couple’s first baby!
  • Light and bright open-plan living layout
  • Functional kitchen with breakfast bar and ample storage

Home extension in Grey Lynn

  • Groundwork challenges still led to a beautiful finish
  • Bright and airy extra two bedrooms and laundry

Stylish Interior Renovations in Te Atatu

  • A smart and spacious kitchen redesign
  • Neutral, modern colour palette
  • Statement lighting throughout
Laundry set-up with stacked washer and dryer


How much value does a renovated bathroom add?

Kitchens and bathrooms are typically the best rooms to renovate for adding value to your home. 

Does replacing interior doors add value?

Since interior doors affect the look, function, and flow of your home, updating them can definitely add value. 

Ready to talk about your house dreams with a specialist?

Get in touch today to speak with a Renovation Consultant about your plans to renovate your home and discuss things to improve your house’s value. We look forward to hearing your ideas and sharing expert advice!

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