Suburbs where an extra bedroom costs up to $3.79 million

New data has revealed the huge premium some buyers are paying for bigger homes, and the surprising locations where the difference is negligible.

Home buyers in some of Australia’s most exclusive suburbs are forking out millions more to buy homes with just one more bedroom.

PropTrack data has revealed the big difference in median prices of three-bedroom and four-bedroom homes across Australian suburbs, with some buyers paying twice as much for a larger home.

The data shows that the biggest price differences were mostly found in some of Australia’s most exclusive suburbs where typical houses already have multimillion-dollar price tags but bigger properties come with a massive premium.

Where an extra bedroom costs millions

Vaucluse in Sydney topped the list with a $3.79 million difference between the median price for three-bedroom houses ($4.55 million) and four-bedroom houses ($8.34 million). Nearby Rose Bay had a $2.83 million difference.

The price difference was $2.675 million in Toorak, Melbourne’s priciest suburb. Nearby Armadale had a $2.59 million difference – equating to a 124% premium above the median price of a three-bedroom house ($2.09 million).

Suburbs with the biggest price differences between three-bedroom and four-bedroom houses

REA Group senior economist Eleanor Creagh said the biggest bedroom price gaps tended to show up in expensive suburbs because additional bedrooms often signified a premium product.

“Once you are in prestige markets, the ‘extra bedroom’ is rarely just an extra bedroom,” she said.

“It is usually bundled with a bigger block, a wider frontage, a superior floorplan, more bathrooms, more parking, a pool, better entertaining space, and often a more tightly held location within the suburb.”

Homes with an extra bedroom can cost millions more in pricey harbourfront suburbs. Picture: realestate.com.au/sold

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Eastern suburbs real estate agent Reuben Dunn of Ray White Double Bay said home values in suburbs such as Vaucluse and Rose Bay were usually linked with land size and views rather than the exact bedroom count.

“Three-bedroom houses are more often semis or fundamental smaller properties, whereas once you get to four-bedroom houses, you’re talking big family homes on bigger parcels of land," he said.

In high-end suburbs, homes with a higher bedroom count typically have more premium features such as pools or views. Picture: realestate.com.au/sold

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There were also huge differences between median prices for two- and three-bedroom units in many affluent Sydney suburbs, mostly clustered around the harbour or beaches.

A three-bedroom Elizabeth Bay apartment cost $2.61 million more than a two-bedroom unit – the biggest difference nationally.

Pyrmont three-bedroom apartments typically sold for $2.45 million more than two-bedders, while the difference was $2.13 million in Kirribilli.

Suburbs with the biggest price differences between two-bedroom and three-bedroom units

Ms Creagh said scarcity can be a major factor in the high-end apartment market, with buyers prepared to pay more for rarer, premium homes.

“In prestige unit markets, the jump from two to three bedrooms often means moving from an ordinary apartment into a very different product,” she said.

“This could be a higher level, views, harbourside positioning, superior internal area, more parking, and often a much more limited supply.”

Mr Dunn said three-bedroom unit buyers were often downsizers with significant equity available and were prepared to pay more for larger apartments with more living space.

Larger three-bedroom apartments in harbourfront suburbs can cost twice as much as two-bedders, PropTrack data shows. Picture: realestate.com.au/sold

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At the other end of the spectrum, the data shows that it’s much more cost-effective to upgrade in areas where house prices are achievable, with price differences based on bedroom counts tending to be much smaller.

The step up from three to four bedrooms adds about $105,000 to the median price of a house in Penrith in Sydney’s west, $79,500 in Frankston in Melbourne’s southeast and $40,000 in Logan Central in Brisbane’s south.

Values for larger properties exploded during the pandemic when households who were spending more time at home placed a premium on space, prioritising home offices and larger block sizes, Ms Creagh said.

“Today, the preference for space has not disappeared, but it is being filtered through affordability constraints, and higher mortgage rates,” she said.

How upsizing costs vary across the capitals

Comparing median prices for two, three and four bedroom homes in each capital city paints a different picture, suggesting that the priciest cities don’t always have the biggest upgrade cost.

Canberrans pay the biggest cost moving to larger homes, with four-bedroom houses typically costing $278,000 more than three-bedders.

Upgrading from a three-bedroom to a four-bedroom house costs $247,500 in Adelaide and $205,000 in both Sydney and Hobart.

Melbourne is the most affordable city for upsizing to a four-bedroom house, with a $80,000 difference in median prices, followed by Brisbane ($105,000), Darwin ($128,000) and Perth ($136,000).

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Canberra also has the highest cost for upgrading from a two-bedroom house to a three-bedder ($185,000), followed by Brisbane ($100,000).

Sydney, Melbourne and Perth are in the unusual position in that three-bedroom houses actually have lower median prices than two-bedroom houses.

This is because the greatest concentration of two-bedroom houses is found in inner-city suburbs, where lots are smaller and median prices are typically higher.

Two-bedroom houses have lower median prices than three-bedders in some cities due to two-bedroom houses being concentrated in inner-city suburbs with higher land values. Picture: realestate.com.au/sold

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Ms Creagh said two-bedroom houses were often compact inner-city properties such as terraces or townhouses, which are more common in inner suburbs with high land values.

“A three-bedroom house, by contrast, may more often sit in a middle-ring or outer-ring suburb where the dwelling is larger but the land value is lower,” she said

Two-bedroom houses are an uncommon configuration, with about 5,000 listed for sale across Australia on realestate.com.au at the time of publication, representing less than 5% of the total number of houses for sale.

There were about 33,000 three-bedroom houses, 53,000 four-bedroom houses, and 14,000 five-bedders listed for sale.

Melbourne is the priciest city for upgrading from a one-bedroom unit to a two-bedder, with median prices differing by $220,000. Darwin is the most affordable with a $91,000 price gap.

In Sydney, it costs about $370,000 to jump from a two-bedroom to a three-bedroom apartment.

Brisbane has the smallest difference between median prices for two-bedroom and three-bedroom units, but larger apartments still command premium prices in pricey riverfront and inner-city suburbs. Picture: realestate.com.au/sold

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But opting for a third bedroom is cheapest in Brisbane, where the difference in median prices is just $40,000.

Three-bedroom units are much less common than two-bedroom units Australia-wide, with about a third as many listed for sale on realestate.com.au at the time of publication.