To establish a rule-of-thumb guide to setting a budget for building a new kitchen or renovating an existing kitchen, begin by trying to estimate the current sale value of your home (house-and-land, townhouse, or apartment).
Look at recent sales of similar homes in your area (refer to sold prices, not asking prices or price guides). If you’re still not sure, ask a local real estate agent for an opinion.
Depending on the specifics of each individual situation, it would be generally considered quite reasonable for your kitchen renovation budget to represent 5% of your home’s current value.
In other words, if your property’s current value is $500,000, you could probably invest up to $25,000 in a new kitchen (not including appliances) without much risk of over-capitalisation, whereas with a $1M property you might confidently allow up to $50,000 (plus appliances).
In some areas, such as where surrounding homes are renovated to a very high standard and have achieved significant gains in value, you could perhaps spend more than 5% of your home’s current value on a kitchen update – choosing the classiest finishes and top-of-the-line appliances – and still get a considerable return on your investment whenever it may come time to sell.
Not everyone is looking for a dream kitchen to enjoy for themselves and add value to their home over the long term.
Some kitchen renovations are being undertaken on a very slim budget, or with the intention to maximise short-term financial goals.
Practical advice from the experts at KISK can help you get the most value out of every dollar you invest in your kitchen renovations – just talk to us.