How extra bedrooms add to how much your property is worth: Secret Agent
The room type that your property has will determine how much it costs per square metre, according to Secret Agent's latest report.
This section of the index breaks down properties into individual rooms to determine how much value each adds to the house.
Factors that had a significant impact on sale prices for both terraces and townhouses include location (suburb), time of sale, number of car spots and whether the house had a cellar.
Table 7 shows the expected price per square metre by room type, controlling for the abovementioned factors.
Note that the price per square metre for indoor space in both terraces and townhouses are lower than the first part of the study, which was a simple average analysis.
Overall, indoor space in terraces is worth about $2,600/m2 more than in townhouses on average, while outdoor space attracts a $450/m2 premium for townhouses over terraces.
Bedroom space was most valuable for terraces in our sample, at about $14,700/m2, just ahead of bathrooms ($14,000/m2).
Extra living space added the least value at $6,900/m2.
However, this does not mean that replacing living area with extra bedrooms is always a good idea: a functional balance is required.
Terrace homes with too many bedrooms and not enough bathrooms were expected to sell for a lot less than more balanced homes: $74,000 less if there were two more bedrooms than bathrooms, and $205,000 less with three more bedrooms than bathrooms.
This is compared to homes with one more bedroom than bathroom.
For townhouses, bedroom space ($6,200/m2) was worth significantly less on average than for terrace houses.
This is only slightly higher than expected value of living area ($5,900/ m2).
On the other hand, bathrooms, including ensuite and powder rooms, had the biggest impact on expected sale price, valued at $19,400/m2 on average, which is about $4,000/m2 more than for terraces.
The average total bathroom area for townhouses was 10.5m2, larger than the 8.3m2 average for terraces.
It is likely that bathrooms are more expensive per square metre for townhouses than terraces because these are nearly always new and therefore made of higher quality fittings and fixtures.
For developers, the data seems to suggest that buyers are looking for townhouses with a good balance between bedrooms and bathrooms, so adding a second bathroom to a two bed one bath townhouse is expected to yield the greatest returns.
Dining and kitchen areas added the least value in townhouses.
This could be because most kitchens in townhouses are of similar size and quality, meaning buyers take these as a given and do not value extra space as highly.
Other considerations
• As part of their study, Secret Agent looked at just about every conceivable room arrangement (central bathroom, living room, kitchen/dining, bedrooms on one end, bathrooms on both ends, etc.), and found that when it comes to layout, this did not have any significant impact on the average sale price in our sample. Whilst there is no doubt different buyers will prefer certain layouts, on average our data suggests that there is no dominant layout commanding a premium.
• The number of levels (ground, first, second) had no impact on average sale price of either terraces or townhouses.
• For terraces, whether the property was single or double- fronted made a difference, with double-fronted homes expected to sell for more.
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