The humble granny flat has been touted as a potential remedy to ease the housing shortage in Australia’s largest cities, new analysis shows.
CoreLogic partnered with national town planning research platform Archistar and real estate construction lender Blackfort to assess every residential block across Sydney, Melbourne and Brisbane to determine how many properties have building potential for a self-contained two-bedroom unit.
As it turns out, a lot. More than 655,000 residential properties fit the bill, amid forecasts indicating an undersupply of 106,300 dwellings in the next five years, CoreLogic Research Director Tim Lawless says.
“For policy makers and government, granny flats present an immediate and cost-effective opportunity to deliver much needed housing supply within existing town planning guidelines,” Mr Lawless said.
Granny flat development benefits
But is the addition of a self-contained dwelling a smart investment choice for homeowners and investors?
Adding a granny flat can provide extra living space for a family or be used for rental purposes, boosting a property’s value and potentially creating extra income.
“CoreLogic figures show an extra two bedrooms, and an additional bathroom could add around 32% to the value of an existing dwelling. For a house worth $500,000, the addition of a granny flat has the potential to add approximately $160,000 to the value of the property,” said Tim Lawless.
With the pandemic transforming the way we live and more children staying at home for longer, a granny flat offers a convenient way to create a working from home space or a way to help out an adult child if they need it.
A well-designed studio can also become an oasis for older children (or the teenager who has just taken up drumming) or accommodation for when the in-laws decide to visit. There is value in creating a space which can be utilised in a myriad of ways: music studio, pool houses, holiday accommodation, room for members of the family, the au pair, carers for older parents or paying tenants to create an income stream.
If homeowners or investors are considering the addition of a granny flat on their property, there are a few things to remember to ensure it doesn’t devalue the existing property.
Functionality and accessibility are key when designing a granny flat – for example, don’t design the granny flat so it overlooks the main residence, and keep elderly or disabled residents and guests in mind when planning the layout. Other things worth considering are incorporating extra storage, integrated appliances for ease of living, and ensuring the granny flat has enough space for a small outdoor area.
Top council regions and suburbs for granny flat potential
Sydney
Top 5 council areas: Central Coast, Northern Beaches, Hornsby, Blacktown, Ku-Ring-Gai
Top 5 suburbs: Baulkham Hills, Castle Hill, Cherrybrook, Carlingford and West Pennant Hills
Melbourne
Top 5 council areas: Mornington Peninsula, Casey, Monash, Knox, Manningham
Top 5 suburbs: Glen Waverley, Rowville, Berwick, Rye, Doncaster East
Brisbane
Top 5 council areas: Brisbane LGA, Logan, Moreton Bay, Ipswich, Redland
Top 5 suburbs: The Gap, Alexandra Hills, Redbank Plains, Albany Creek, Rochedale South
By Azal Khan
* Data provided by CoreLogic, 17 October 2023