Homeowners and investors should take care not to overcapitalise on home improvements as interest rates look set to rise over coming months, Archicentre has warned.

Ron Tanton, Queensland state manager of Archicentre, says design, budgeting and cost controlling aren’t at the “sexy end” of renovation but they’re the things that will make people money on renovation projects.

“More than half of all Australians renovate at some point in their lives with the hope of generating extra non-taxable income when they sell the family home, the principal place of residence,” Tanton notes.

“If homeowners get the renovation design wrong they can end up spending tens of thousands of dollars to devalue their home or reduce its market appeal.”

An example Tanton cites is a young couple who turned a three-bedroom home into a two-bedroom home by building a new large bathroom and walk-in robe at great cost.

“When the couple called the real estate agent to sell the property they were stunned to find the removal of the third bedroom had devalued their property by between 10 per cent and 15 per cent as they had made it unmarketable to families with more than one child – thus a large part of the market.”

Tanton says renovators pouring money into expensive fittings such as highly expensive taps and whitegoods in the kitchen and bathroom can often find they add little or no extra value to the sale of the home, cutting into the financial return.

Archicentre is urging caution for homeowners to ensure they maximise their profit by doing their homework and not banking on forecasts that property values will rise.

Archicentre says the most requested home renovation improvements are:

· Ensuite: 93.2 per cent
· Walk-in robe: 85.4 per cent
· Kitchen drawers, not cupboards: 81.7 per cent
· Frameless showers: 80.8 per cent
· Large island kitchen benches: 77.2 per cent