Avoid ‘Over-capitalising’ on Your Property

Avoid ‘Over-capitalising’ on Your Property

Overcapitalising is spending money on your property which will not increase the value at all; in some instances, it may even depreciate the property’s value. The factors to consider before renovating are: the property’s location, suburb, neighbouring properties, the purpose of the renovation, your budget and an excellent understanding of property values in your area. Real estate agents and builders are a great source of information.


“The general rule of thumb, if you are doing a cosmetic renovation like painting, floor sanding, ripping up carpet and landscaping, is to spend no more than 10 per cent of the property value” e.g. no more than $50k on a $500k property.


Keep in mind these will not be seen nor valued by the new property owner; there is an assumption that a property is structurally sound so spending unnecessarily is bound to be undervalued.


This is one of the most used areas of the house. Making the kitchen functional, bright and airy is a great way to increase the value of your property.


Smart design and functionality in the bathroom is a great way to save money but have a ‘wow’ factor which will help the value of the property. Clever lay-outs like having all the plumbing on one wall can save you thousands but not compromise the look and feel of the renovation.


Make sure they reflect the area and the overall profile of the house. For example, if the home is in a premium suburb and prospective buyers would not compromise on brands, then putting in cheaper brands will devalue the property. This is because prospective buyers will factor in having to re-fit the house with quality fixtures and fittings. Alternatively, a middle of the range house will not gain or lose value if the fittings are very expensive; they will however make your renovation unnecessarily more expensive than it needs to be.


If you love gold lions, statues of Greek Gods, columns, flowing water, etc and insist on including these in your renovation; then it’s a sure way to over capitalise and spend a lot of money without the property’s value also appreciating. In fact, it may even cause the property’s value to drop. The aim is to keep the renovation simple, easy and ‘vanilla flavoured’ so it appeals to 99% of the prospective buyers.


Focus on highly visible areas of the home like the hallway, entrance, lounge area or anywhere else which attracts the eye; Bling up these areas with new paint, tiles or splashes of interior design excellence!


Rooms like the laundry, guest bedrooms, hidden closets, etc don’t deserve much or any spending. Just enough money needs to be spent to not make them into a talking point; they just need to be functional. You don’t need ceiling to floor tiles or designer cabinetry in the laundry.


Make the street view of the house appealing with clean, functional and easy to look at landscaping. Grass needs to be green, there should be no weeds and there should be no plant congestion with shrubs growing into each other. Other than making outdoor areas look functional and simple, spending money on landscaping usually equates to over-capitalising.


Chadstone Tower 1
Level 8, 1341 Dandenong Road
Chadstone VIC 3148

1300 928 453 admin@constructmelbourne.com.au