In a time of rising rents and housing prices, Australia is experiencing a boom in the construction of Granny flats in a state wide quest to house occupants of all ages from teenagers to middle aged single parents to visiting travellers. Home owners with ample backyards are tapping into this trend whether it be to entice family members to spend a year or two more before leaving the nest, to construct a drinking shed for rowdy boys nights or to earn some extra $ on Air BnB renting a nicely renovated Granny flat out to foreign guests or travellers.
The Six Figure Granny Flat
In a recent survey conducted by Gateway Credit Union they were quite surprised to discover that approximately one third of Australian home owners are seriously considering building or extending their property by adding a renovated and self-contained Granny flat unit. The price is very attractive in comparison with that of a 1 or 2 bedroom apartment or small house with construction costs ranging from $15,000 for a simple extension all the way up to $100,000, the six-figure Granny flat. The obvious benefits being to increase recreation space for family & friends, to add a work from home office or simply to add resale value to the property.
There is also the option for a home owner to rent out a Granny flat extension and contribute a healthy sum toward the mortgage etc, in this case careful upkeep of the premises is fairly essential along with an up to date insurance plan including full liability inspection. In some states laws and regulations involving rental of extended property are presently being reviewed. It may be that from state to state there will be some slight differences in the housing laws. Air BnB is also taking Australia (and the world) by storm with opportunities for financial gain growing exponentially as travellers are offered novel alternatives to mainstream hotels etc. What used to be seen as a backyard, perhaps a swimming pool, or a BBQ area and a hit of cricket, is now being sized up as something more. Pay dirt. Prime real estate for the next Granny flat build, not unlike financing your first house or a larger apartment, the construction costs of a Granny flat may require a trip to your local lending centre to discuss a variety of popular options.
Back in 2009 the NSW housing laws were modified to allow the construction of Granny flats or second dwellings, across all residential zones, which could be approved often as fast as within 10 working days. The results really speak for themselves, an almighty growth in the erection or extension of Granny flats all across the state, a 260% increase in fact over the last six years.
Kim Hawtrey, Associate Director at BIS Shrapnel says “that while there’s been a lot of focus on the construction boom of high-density developments, the rise in the affordable alternative has gone largely unnoticed. It is a granny flat boom. We are building almost 5000 granny flats a year in NSW alone!” Of course it is not rocket science, behind every Granny flat story there exists a budget and a bank balance. Australians are improvising their way through a tough economy and ticking as many boxes as possible in the race to get ahead of the pack.
For the majority of people working a 9– 5 existence, a six- figure Granny flat in the region of $100,000– $150,000 will probably tick more boxes than a $650,000- $750,000 3rd floor, beachfront apartment. For those big European families who traditionally may have members from several generations living in unison in the family home, added recreational space at a premium cost will be an advantage. Likewise shrewd investors, who may buy first and develop later, would look favourably upon the opportunity to house multiple tenants within a single block of land. Particularly across the suburbs of Sydney, Bankstown, Blacktown and Parramatta there has been a tremendous increase in the number of Granny flats since the start of the decade compared with very little increase in the memberships of the local lawn bowls clubs. The six-figure Granny flat has never been hotter.