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According to CoreLogic, approximately 655,000 individual properties across Sydney, Melbourne and Brisbane have been identified as suitable for self-contained two-bedroom units.
On the back of Housing Australia (formally NHFIC) forecasting a shortfall of more than 100,000 homes over the next five years, CoreLogic research director Tim Lawless has emphasised the significant untapped development potential.
Mr Lawless estimated that granny flats could contribute to “fast-tracking a partial remedy to the housing shortage in the country’s largest cities.”
“For policymakers 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.
“For home owners, the addition of a second self-contained dwelling provides an opportunity to provide rental housing or additional accommodation for family members, while at the same time, increasing the value of their property and potentially attaining additional rental income.”
As local and state governments add incentives to encourage long-term housing supply, Mr Lawless said granny flats could yield a positive outcome for investors.
“Adding a granny flat accommodates extra living space for extended family, multi-generational households or rental purposes, thereby boosting a property’s value and potentially creating extra income for rising living costs,” Mr Lawless said.
SA pushes councils to ease granny flat red tape
The South Australian government is exploring the potential of granny flats being rented to non-family members.
Planning Minister Nick Champion has written to the State Planning Commission, urging changes to the State Planning Practice Directions to prevent councils from restricting the leasing of ancillary dwellings or granny flats to only immediate family members.
In addition, Consumer and Business Affairs Minister Andrea Michaels has pushed to amend the Residential Tenancies Act to explicitly state that granny flats can be rented out to non-family members.
These changes aim to increase rental stock, place downward pressure on rental prices and provide more affordable housing options.
While current planning rules do not prohibit the leasing of an ancillary dwelling to a tenant outside of the immediate family, many councils have routinely added a condition to development approvals preventing the rental of granny flats to non-family members.
As such, CoreLogic figures showed that an additional two bedrooms and an extra bathroom could increase the value of an existing dwelling by around 32 per cent.
“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,” Mr Lawless said.
The data indicates that Sydney has the most granny flat development opportunities, with approximately 242,000 suitable properties, representing 17.6 per cent of the metro region’s housing stock.
Melbourne has almost 230,000 potential sites, representing 13.2 per cent of the housing stock, while Brisbane has nearly 185,000 suitable sites, representing 23.3 per cent of houses across the metro region.
Of these sites, more than a third (36 per cent) are within two kilometres of a train or light rail station and 17 per cent have a hospital within the suburb boundary, demonstrating a combination of accessibility and opportunity to fast-track housing options for essential workers in the healthcare sector.
[Related: Investors will turn away from Victoria due to expanded tax: REIV]
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