Renovate or Rebuild: are you risking the likelihood of overcapitalising?

House renovation is something of an Australian national obsession, with top rated shows on almost every network dishing out a heap of renovation advice.

But if you want a change of scene without losing your fantastic location, should you renovate or rebuild your property and what do you need to think about before undertaking such a massive task?


What is overcapitalising? Overcapitalisation can happen if you renovate or rebuild and is when you put so much money into a property to improve or build it, that you won’t get your money back when you want to sell it.

Over the past few years, a lot of properties have been shielded from potential overcapitalisation problems, but in a slowing market, this issue could be a growing concern for redevelopers and renovators alike.

The best way to avoid falling into this trap is by researching your local area and the median price of properties. Go too far above this and you risk overcapitalising and pricing out a large number of prospective buyers. Another way to avoid overcapitalising is to settle in for the long haul.

Changing the structure

There are lots of reasons people may decide to renovate or rebuild their homes – but the reason you feel the need to alter your existing property may help decide whether you start from scratch or renovate.

If your property needs to undergo structural changes – it may be more cost effective to start again and rebuild. The cost to knockdown and rebuild a house can be quite reasonable depending on the type of plot and what you want built, whereas the cost of renovating a house with structural problems has the potential to explode due to unforeseen issues.

This may also be the case if you need to undertake some house remodelling. If you have outgrown your ideally placed property, and want to add a couple of bedrooms, a total rebuild might be a better option than just tacking on extra rooms with no regard to the overall layout of the property.

Keeping it real

So why would you bother with the hassle of months of half-finished rooms and lost weekends renovating if it’s easier to start again by rebuilding? Well apart from the fact that people love the challenge of renovating, the home itself may command you to maintain its original character.

If you fell in love with the character of your property, ripping it all up and starting again defeats the purpose of buying that home in the first place.

Keeping authentic features and maintaining the historical character of the street can also be major influencers on house renovation projects – and avoid the trap of building a white elephant that may struggle to sell.

Asking for help

If you’re planning on selling your property and want advice on overcapitalising or how to best remodel your home to achieve the maximum selling potential, get in touch with Clark Real Estate today! Our expert agents will help you get the best price for your property and advise you every step of the way.