Australia set for a granny flat boom

From CoreLogic comes a spruik about granny flats as a solution to Australia’s housing affordability woes:

More than half a million home owners across Australia’s eastern seaboard have enough space on their property to build a granny flat, which could boost home values by 30 per cent and add around 27% to rental income.

Combined analysis by CoreLogic and Archistar identified 583,440 properties in Sydney, Melbourne and Brisbane that meet the criteria for an additional self-contained unit of at least 60 square meters.

Constructing a two-bedroom granny flat would require an initial investment of around $200,000, while the outlay for a one-bedroom dwelling would be approximately $120,000.

CoreLogic Head of Research, Tim Lawless said: “Building a granny flat is becoming an increasingly compelling proposition for homeowners in a relatively lacklustre market. Not only can it help to manufacture new capital gains, but it has the potential to generate rental income while meeting demand for more affordable housing.”

A granny flat typically rents out for less than the price of a standard apartment, making it an attractive and affordable option for renters on a budget.

“Many properties identified as suitable for a granny flat are in densely populated and traditionally expensive areas, such as Sydney’s Northern Beaches or Hornsby. More granny flats on the rental market will make it easier for young people to stay in their preferred area, rather than move further afield to find value for money,” Mr Lawless said.

Co-Founder of Archistar, Robert Coorey said: “Many home-owners are sitting on a pot of gold in the form of excess land that could be developed to generate a new income stream. This has wider economic benefits for renters who want to access popular suburbs without paying a premium.”

“The family benefits of a secondary residency can’t be overlooked, whether that’s giving adult children more privacy while they save for a mortgage, keeping loved ones close as they become more reliant on care or having additional accommodation for overseas visitors,” he continued.

Capitalising on this untapped potential for half a million additional dwellings could also deliver far reaching economic and social benefits, including greater employment opportunities for builders and other tradespeople.

“What is a relatively small outlay for home owners could boost the construction industry to the tune of $87.5bn and accommodate the growing population in some of the cities’ most popular suburbs,” Mr Coorey continued.

“While the benefits are tremendous, one minor watch out is regulation on second residencies, which tends to change state to state. Archistar’s platform helps home-owners by instantly assessing thousands of zoning and planning laws and producing a report, so it’s worth taking this step and consulting a local planning expert before you proceed,” Mr Coorey said.

There is nothing “tremendous” about a boom in granny flats. All it means is that young Australians have been priced-out of the housing market and forced to live in cramped conditions. As Houses & Holes noted this morning in relation to ‘tiny homes’:

In the least populated land mass on earth we have to build literal shoe boxes to house our kids. It is basically proposing to ghettoise entire generations of future Australians as trailor trash.

And for what? To protect the fattened bankers, builders and ScoMo’s Property Council mates of the generations before.

Too right.

Leith van Onselen
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  1. You could also buy an old rustic combi van, park it on your driveway and rent it out as a minimal prefab home experience.

    • drsmithyMEMBER

      Exactly. In the space of a 2-bed granny flat and a similar capital outlay you could probably park 3-4 caravans and get 2-3x the rental income.

      So long as you could stand the 2-stroke buzz at all hours of the day as they went to and from their gig jobs, you’d be sitting pretty.

      • kannigetMEMBER

        Put them on top of shipping container homes and call it high rise…. Max out the potential and get 6 times the income, if ya gunna go, ya best go big!

  2. HadronCollisionMEMBER

    Eco tourism air bnb off grid on ours if we weren’t jettisoning the farm

    120k but?!

    I spose with 50/hr cash rates for labour, yeah
    5% powerpass only goes so far

  3. It’s amazing how these ‘analysts’ tip-toe’ or completely ignore the role mass immigration plays in relation to housing affordability, clown world here we come.

    • kiwikarynMEMBER

      You could fit at least 8 newly minted skilled workers in one of those granny flats. And you have the added advantage of not having to use Uber Eats whenever you fancied Indian takeout.

      • Apropos, I not long ago read this by Mark Steyn (about Grenfell Tower in London):

        “…In Kings Cross, a £2.1 million two-bedroom flat will be occupied by a two-salary couple with one designer kid or a home office. In Grenfell Tower, the arithmetic gets a bit more haphazard. The building contained 120 flats of either one or two bedrooms, and supposedly more of the former. Yet there were reports that over 600 people were present. It seems unlikely anyone will ever know for certain – at least compared with, say, who died in what street on which night during the Blitz. But the desperate fliers pinned to street railings tell their own story:

        No one has heard from 16-year-old Nurhuda El-Wahabi, 21-year-old Yasmin El-Wahabi and their family. They live on the 21st floor. Please spread this round and keep a look out for their family.


        “The Choucair family is missing in the Grenfell Tower fire. They lived on the 22nd floor.”

        The family was named as mother, Nadia Choucair, and daughters Mierna, 13, Fatima, 11, and Zeinab, three.

        When the world comes to Mayor Khan’s “global cities”, this is the only way it can afford to live there. Last year, across town on the outer reaches of the District Line in East London, I took a stroll along streets of terraced houses marveling at the garbage piled up in the small front yards, far beyond what one would expect a “three-bedroom” house ever to be able to generate and certainly beyond the capacity of traditional municipal trash collection. My expert local guide could tell from the mountains of detritus which addresses were ad hoc lodging houses for transient Romanian laborers and which were the compounds of vast extended families of fecund Bangladeshis. But in neither case do terms like “one-bedroom flat” and “three-bedroom house” have the same meaning they do for those marketing the delights of 3 Merchant Square…”

  4. How pathetic have we become. Instead of talking about starting a small business, being an entrepreneur or bringing in high value business, our media spruiks the path to riches as plonking a donga in your backyard and renting it out. Fvck me dead.

    • Yep. It is so apt that The New Inventors was broadcast from 10 Mar 2004 to 17 Aug 2011 while:

      The first season of The Block began airing on 1 June 2003 on the Nine Network, replacing Backyard Blitz and Location Location in the network’s flagship time slot

      and it is still going.

      Why invent a better suitcase when you can get rich by stealing wages and owning 5 houses:

    • CoreLogic Head of Research, Tim Lawless said: “Building a granny flat is becoming an increasingly compelling proposition for homeowners in a relatively lacklustre market. Not only can it help to manufacture new capital gains, but it has the potential to generate rental income while meeting demand for more affordable housing.”

      Spending $200k to build a box, and having your property increase in value by $200k is not really a capital gain is it? Or at least it’s a bit pointless.

  5. kiwikarynMEMBER

    Because all home owners would love to have a bunch of low income ferals living in their backyard. The Great Australian Dream. Yeah, nah.

    • Actually they won’t necessarily be low income ferals. As H&H says, this is the fraudulent “new option” for average young people who should have got a LOT more for their money. The parallel here, is the large middle class in India, with good qualifications and a good job, who still live in illegal slum housing – because the “formal” market is so rigged and corrupt. Apparently early every morning in many Indian city slums, a whole lot of people emerge wearing decent suits and carrying briefcases, heading off to work.

      Pommyland has been the first developed nation to revert backwards to third-world-nation style housing markets (thanks to their 1947 Town and Country Planning Act), but Australia seems to be trying to set new records for the speed at which it is possible to get to London-style housing injustice after decades of median-multiple-3 normality. Of course everyone knows the problem in the third world is corruption, but we call it urban planning and saving the planet.

  6. Only in australia it costs $200000 3 times average annual income to construct a garden shed on already owned and developed land.
    Australian dream is now to have a tiny backyard shared with tenants

    • Nah, the Poms have been ahead for a long time, if you want to see what might be coming next, look over there. Crawl spaces for rent; 1/4 share in a single room quite normal in rental ads; Councils using heat-detecting equipment at night to bust illegal accommodation in actual garden sheds, garages, ceiling cavities, etc; jackboots, riot gear, truncheons, handcuffs and Black Marias swftly into action when anyone tries “squatting” anywhere, especially the Green Belt….

    • HadronCollisionMEMBER

      Lets say, 10m x 10m?
      1 BR
      1 bath/euro laundry
      Small deck balcony?

      termite protection
      nails/screws/connector plates/brackets/tie downs
      plumbing and materials
      tiler and materials
      painter/plasterer and materials
      sparky and materials
      doors, fixtures, window frames
      sewerage connection or septic
      solar power (?)
      solar hot water and/or gas booster or gas
      it adds up real quick

      10m x 6m deck cost me 60k (including AC/hardi removal and reclad in iron of 17m of house) and that was with TP subfloor, 3cu of concrete, LVL rafters, merbau decking and me doing a lot of work (but you should see the view)
      Adds up really quick

      • That’s exactly my point. In US it cost 60k USD to built 1500sqft house. In Europe 60k EUR to build 100sqm prefab huse with 5 star energy rating. Here for 60k we get a 60sqm deck

      • What a good proportion of Aussie tradies have been able to get away with in poor workmanship over the last 10-15 years is beyond shameful.

  7. LabrynthMEMBER

    A granny flat is a terrible investment for the majority of people for the following reasons:

    1) It subjects your land to capital gains tax if it is rented out
    2) Generally you need to upgrade your water metre
    3) You can’t have two electricity metres on one property so you need to pay 100% of usage
    4) Generally sewage is not in the correct location and so this means ripping up driveways
    5) Who wants people walking up their driveway to get to the granny flat or along their side windows
    6) Granny flats only work from an ‘investment perspective’ if separate access is available which generally means corner blocks or blocks with laneways/dual street access.
    7) The opportunity cost of leveraging that $120,000 to buy a unit or property will have better returns if intending to hold for 10+ years.

    • I’ve heard incessantly why it is a great investment option from a work colleague.
      It’s now been six months since completion and I think some of the shine has worn off, seeing as though the first tenants (vibrants) skipped out in the dead of night (no landlords insurance) and it has been untenanted for approx. 2 months. He can’t seem to figure out why at $500 per week in Padstow (now with landlords insurance).

      • Love it.

        Can we get future updates. I want to know when this guy gets another tenant.

        Also more on the vibrants skipping dodge in the middle of the night. This could be a novella.

      • kiwikarynMEMBER

        Is it furnished? Maybe he needs to put 2 sets of bunk beds in each room (including the lounge, and the hallway if its wide enough), and rent it by the bed. I think that’s how its done these days.

    • proofreadersMEMBER

      @Labrynth You know where the various levels of government (Fed, state/territory and local) will tell you to stick your very good and cogent anti-investment reasons?

  8. boomengineeringMEMBER

    My place had a granny flat when bought, but changed it into a workshop as the machines don’t peer into the windows on the way past. bTw 100A per phase= 300A.

      • boomengineeringMEMBER

        Didn’t ask for it but wouldn’t say no as don’t have to use it all. The benefits of living near Brookvale industrial, although a lot of green (trees, grass) and not unpleasant new building across road.

  9. They would have to change the laws in Vic to allow rentable granny flats. At the moment a granny flat can only “legally” be used for a family member and is supposed to be pulled down when no longer needed. That being said, there are plenty of granny flats being rented out which contravenes the law.

    OTOH, in NSW, it is perfectly legal to rent out a granny flat, and there are house and land packages available where you can build a house and granny flat together.

    • Thanks for the info about Vic. I was wondering about that. What a tragedy that the fake Greens do not allow granny flats in Vic.

  10. kannigetMEMBER

    Imagine the wealth generated as we bulldoze that old house and put 6 granny flats and a communal spa bath on the block.

  11. proofreadersMEMBER

    As per Michaelia Cash, Adani spells jobs and presumably, granny flat boom spells heaps more jobs – perhaps, ScoMo’s 1.25m promised jobs?

  12. I can tell you right now, the average person at CoreLogic actually believes this stuff. I received the press release at work and felt like ranting about it, but of course nearly everyone else is 100% pro bubble.

  13. Australian Mums and Dads,

    Learn from the Chinese:

    If your Daughter marries a vibrant (a rich and good looking one, from the top 5% of the intake, obviously, probably they will have light skin as well), you should ask for a bride price.

    The rate is $38,000 USD in Beijing.

    I think AUD$200,000 should do it in Australia, particularly if she has valuable recessive traits like Blond Hair and Blue Eyes which will be extinguished from future generations with the pairing.

    • This works in China because due to the One Child Policy and male babies being favoured, there are significantly more men than women (some 30 million).
      On the other hand, in Australia, she can marry, later decide that she doesn’t love him any more and them shaft him for half of everything in the Family Court.

  14. I’m going to start importing storm-proof canvas tents. Live like an African for $50K. *Lion King music.

    • kiwikarynMEMBER

      Stick a chandelier in it, and its “glamping”. Can rent it for a fortune on AirBnB.

  15. Surely we could fit a couple at The Lodge. And what about Kirribilli House? Must be room for at least two there!

  16. My granny has a flat and is a bit hard up for cash, so I’m trying to persuade her to build a granny flat in it to manufacture some property wealth.