How much does an additional bedroom cost?

Put yourself in this situation of buying a house in Kings Park, Melbourne. The median price of a 3-bedroom house is $645K, while a 4-bedroom house is $705K. For an additional $60K, or 9.3 per cent, you get a bigger house in the same suburb. Would you go for the upgrade?

In context, it’s a bargain. Kings Park is the cheapest suburb in dollar terms to get an additional bedroom, and $60K is about a third of the typical $180K it costs in Melbourne. Compare that with Toorak, where an additional bedroom costs $2.44 million. Yes, the median 3-bedroom house at $3.29 million jumps 74 per cent to $5.73 million for a 4-bedroom house.

Safe to say the suburb you are in makes all the difference in how much an additional bedroom costs, but nationally, going from a 3 bedroom house to a 4 bedroom house will typically cost you $175K more, assuming you are staying in the same suburb.

It’s most expensive in Canberra at $236K, followed by Sydney at $227K. Regional areas are cheaper than their nearest capital, but only by about $20K to $60K. Meanwhile, going from 4 to 5 or more bedrooms costs about $40K more, at $215K nationally. Brisbane is the most expensive at $264K, just ahead of Sydney at $262K. Typically, Regional SA is the cheapest place to upgrade a house, at $133K to go from 3 to 4 bedrooms and $123K to go from 4 to 5 or more.

But maybe the most surprising thing is that upgrading a unit is more expensive than upgrading a house, even though units are cheaper to buy. Going from a 1 bedroom unit to a 2 bedroom unit adds 41 per cent, and going from a 2 bedroom unit to a 3 bedroom unit adds more than 46 per cent, compared with 21 per cent for a 3 to 4 bedroom house.

The most expensive upgrade of all is going from a 2 bedroom unit to a 3 bedroom unit. It costs $315K, almost double the upgrade from a 3 to 4 bedroom house. One reason is that 3 bedroom units are less common, making up about 3 in 10 unit sales, and in the priciest suburbs they are likely to be the most premium of penthouse apartments.

The most extreme case is Sydney, where going from a 2 bedroom unit to a 3 bedroom unit typically costs $451K, the highest figure in the table. That’s roughly the combined cost of going from a 3 bedroom house to a 4 bedroom house ($227K) and then to a 5 bedroom house ($262K).

Where are the cheapest suburbs to upgrade?

In general, the cheapest suburbs to get an additional bedroom are on the outer edges. Melbourne and Brisbane have three each in the top ten, Sydney’s are in the west and south-west, and Perth and Adelaide have one apiece. Even in Sydney, Bidwill-Hebersham-Emerton costs just $65K, although a 3 bedroom house there already costs $844K.

For 1 to 2 bedroom units, the cheapest suburbs are mostly in western Sydney, led by Liverpool-East at $67K. Even there a second bedroom adds 16 per cent or more, roughly double what the cheapest house suburbs cost.

For 2 to 3 bedroom units, the cheapest suburbs are all on the outer edges of Brisbane and Melbourne, five each. Rothwell-Kippa-Ring in Brisbane is the cheapest upgrade in any of our rankings at just $44K (7.1 per cent) for a third bedroom, from $621K to $665K. Part of the reason is that 3 bedroom units are common in Brisbane, making up 38 per cent of unit sales against 22 per cent in Sydney.

Where are the most expensive suburbs to upgrade?

The most expensive suburbs to add a bedroom are inner-city or waterfront. Toorak is the most expensive to upgrade a house followed by Sydney’s Bondi-Tamarama-Bronte at $1.38M and Paddington-Moore Park at $1.37 million.

In these suburbs a 4 bedroom house is probably a very different home from a 3 bedroom one. Across 925 capital city suburbs, those with the widest gap between their cheapest and priciest homes tend to charge the biggest premium for a fourth bedroom, even after allowing for how expensive the suburb is.

For units, Sydney dominates. All 10 of the most expensive 1 to 2 bedroom suburbs are in Sydney, led by Sydney (North)-Millers Point at $824K, where a second bedroom adds 92.9 per cent. For 2 to 3 bedrooms, nine of the 10 are in Sydney. Millers Point tops this list too, at $2.74M: a 160 per cent jump, from $1.71M to $4.45M.