More than half a million home owners across Australia’s eastern seaboard have enough space to build a granny flat on their land.
For research house Corelogic, this could push the value of those properties up by approximately 30 per cent.
The rental opportunities are similar, with rental asking prices increasing by 27 per cent with the addition of a granny flat.
CoreLogic’s head of research, Tim Lawless, believes granny flats are an advantage for renters and home owners on a budget.
“Building a granny flat is becoming an increasingly compelling proposition for home owners 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,” said Mr Lawless.
Cost associated with the build
According to CoreLogic, constructing a two-bedroom granny flat would require an initial investment of around $200,000, while a smaller one-bedroom dwelling would cost roughly $120,000.
Co-founder of Archistar Robert Coorey believes home owners are missing out if they don’t use their land to create additional funds.
“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,” said Mr Coorey.
Mr Lawless believes younger Australians are moving into these homes as a cheaper alternative as they try to stay in a preferred area.
“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,” said Mr Lawless.
Mr Coorey also believes the economic impact from unlocking this unused land could potentially be worth billions to the Australian economy.
“What is a relatively small outlay for home owners could boost the construction industry to the tune of $87.5 billion and accommodate the growing population in some of the cities’ most popular suburbs,” Mr Coorey said.