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600,000 potential granny flat sites identified to help with housing crisis

More than 650,000 properties are suitable for the construction of granny flats across Australia’s three largest states, according to new research.

According to Granny flats: Where are the greatest opportunities for development? from national town planning research platform Archistar, real estate construction lender Blackfort and property data and analytics provider CoreLogic, 655,000 properties would be suitable for building a self-contained, two-bedroom granny flat alongside the existing home.

The idea could offer a solution to ease the national housing shortage.

According to the data, Sydney has the most granny flat development opportunities at 242,000, which is 17.6 per cent of the metro region’s housing stock.

Melbourne has almost 230,000 suitable sites, representing 13.2 per cent of total property stock, while Brisbane has almost 185,000 suitable properties, which represents about 23.3 per cent of houses across the metro region.

CoreLogic Research Director Tim Lawless said the results highlighted significant untapped development potential, which could go some way toward fast tracking a partial remedy to the housing shortage in the country’s largest cities. 

“NHIFC forecasts indicate the national housing market is likely to be undersupplied to the tune of 106,300 dwellings over the next five years,” Mr Lawless said. 

“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.

“For homeowners, 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 obtaining additional rental income.” 

Archistar co-founder Dr Benjamin Coorey said accommodating the growing population within these larger capitals is a critical issue that flexible housing solutions can help address. 

“Since granny flat developments leverage existing lot areas and require no changes to town planning regulation, they offer an immediate opportunity to address housing shortages and affordability pressures expected in the coming five years for both buyers and renters,” he said.

Every residential property in Sydney, Melbourne and Brisbane was analysed according to zoning, land area and existing home position requirements to ensure the suitability of the site for a granny flat.

Sydney

Across Sydney’s council regions, the Central Coast has the most granny flat development opportunities, with 41,569 or 17.2 per cent, of all potential sites. 

The Northern Beaches (19,884 / 8.2 per cent), Hornsby (18,344 / 7.6 per cent), Blacktown (17,909 / 7.4 per cent) and Ku-Ring-Gai (14,617 / 6 per cent) round out the top five regions. 

At a suburb level, neighbouring North-West suburbs have the highest opportunity for granny flat development, led by Baulkham Hills with 4673 suitable properties or 43.3 per cent of the housing stock.

This is followed by Castle Hill (4423 / 39.8 per cent), Cherrybrook (3421 / 61.8 per cent), Carlingford (2910 / 46 per cent) and West Pennant Hills (2698 / 49.3 per cent) stand out due to their larger land areas compared to inner-city neighbourhoods. 

“Sydney’s household formation is forecast to outpace supply from 2025, with the most significant undersupply expected through 2025 and persist up until 2026 at -15,900 dwellings,” Mr Lawless said. 

Mr. Lawless said there are immediate lifestyle and financial upsides for investors whose properties met the planning requirements. 

“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,” he said.

“CoreLogic figures show an extra two bedrooms, and an additional bathroom could add around 32 per cent 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.”

Melbourne

Mr Lawless said Melbourne was tipped to face a long housing shortage and the granny flat idea could help ease the crisis.

“Melbourne is expected to face a major housing shortage from 2023 to 2027, with a deficit of 23,800 dwellings, which is nearly twice the anticipated shortfall of 12,100 new dwellings in Sydney during the same period,” he said. 

Within Melbourne’s broad regions, the Mornington Peninsula has the highest potential for granny flat development, with 23,870 sites, which make up 10.4 per cent of the total sites across the city. 

Casey (16,861 / 7.4 per cent), Monash (13,960 / 6.1 per cent), Knox (13,741 / 6 per cent) and Manningham (13,063 / 5.7 per cent) round out the top five municipalities for the most granny flat development sites. 

East of Melbourne’s CBD, the suburbs of Glen Waverley (4009 / 27.4 per cent), Rowville (3674 / 30.3 per cent) and Berwick (3604 / 18.3 per cent) show the highest opportunities for granny flat investment sites. 

Hotspot potential extends out to the coastal suburb of Rye (3705 / 38.6n per cent) and the northern suburb of Doncaster East (3397 / 34.9 per cent). 

Brisbane

Mr Lawless said Brisbane’s housing supply shortfall was more imminent relative to the larger capital cities, with the current forecast of newly built housing supply short by 3100 this year. 

Across the council areas of Greater Brisbane, the Brisbane LGA has the most granny flat development sites, with 184,660 or 40.5 per cent of all opportunities. 

This is followed by Logan (33,414 / 18.1 per cent), Moreton Bay (31,949 / 17.3 per cent), Ipswich (22,569 /12.2 per cent) and Redland (19,243 / 10.4 per cent).

The top five Brisbane suburbs with the highest potential for granny flat development sprawl out across Brisbane’s middle and outer ring suburbs, with opportunities in The Gap (2986 / 48.8 per cent), Alexandra Hills (2789 / 46 per cent), Redbank Plains (2479 / 30.3 per cent), Albany Creek (2378 / 44 per cent) and Rochedale South (2215 / 42.3 per cent). 

Dr Coorey said research showed more than a third of the sites identified are close to existing amenities and services such as transport or a hospital. 

“Granny flats present a cost-effective opportunity to boost housing supply for growing capital populations close to existing infrastructure such as railways, bus routes and major road networks for state and local governments,” he said.

“While building regulations for secondary dwellings differ state to state, this unlocks a combination of accessibility and opportunity to fast track affordable housing options for all demographics, particularly essential workers in industries such as the health care sector.”

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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.