Granny flats could quickly and affordably address the severe housing shortage in Melbourne, Sydney, and Brisbane, a report has revealed.
Archistar, Blackfort, and CoreLogic published the report (pdf) titled ‘Granny flats: Where are the greatest opportunities for development?’ arguing that 655,000 existing homes in capital cities have space for self-contained two-bedroom/one-bathroom dwellings of at least 60 square metres internally.
Sydney has the most existing homes fitting the zoning, land area, and position requirements to build a granny flat (242,081), Melbourne is second (229,051), and Brisbane is third (184,660), according to the report.
Of these sites, over a third (36 percent) are within 2 kilometres of a train or light rail station, and 17 percent have a hospital in the suburb, demonstrating suitability for essential workers in the healthcare sector.
Meanwhile, for homeowners, it could unlock additional accommodation for family members and increase rental income and property value.
CoreLogic Director Tim Lawless said granny flats could provide an immediate solution for improving rental supply while demand continues to outrun it.
The growth of single-occupant households, record migration levels, financial, trade skills, and logistics challenges across the construction sector has contributed to the housing undersupply.
Further, interest rates and cost of living pressures are higher than ever, adding to the challenge of addressing it.
The National Housing Finance and Investment Corporation (NHFIC) forecasted a supply shortfall of 106,300 homes in the next five years as the federal government set a target of 1.2 million homes built during this time, according to an NHFIC analysis.
There is shortfall recognition in federal and state governments, with increased policy and incentive solutions being announced. For example, New South Wales (NSW) government announced Homes NSW to deliver better public and social housing tenant outcomes, provide more affordable and social housing and reduce homelessness.
However, the report noted new measures have yet to be effective and may only have an impact over the medium- to long-term.
“There needs to be more focus on addressing short-term issues with pragmatic and immediate solutions engaging government and industry, leveraging construction innovation, well-placed real estate, and frictionless finance,” it said.
“One solution sits right under the nose of many landowners. These [granny flats] can be premanufactured and installed on attractively located, pre-identified sites at a low cost to homeowners or government and all within existing town planning guidelines.”
Over 100,000 high-quality, pre-fabricated granny flats could be provided over the next five years, according to Blackfort’s manufacturing capability assessment.
Lower Cost Rental Solution
University of Sydney urban planner Professor Nicole Gurran co-authored a report titled ‘Breaking the rules? Informal housing, urban deregulation and secondary dwellings in Australia.’Published in February, it found that a secondary dwellings rental market could grow.
Still, affordability and secure private rental outcomes need to be addressed.
Ms. Gurran said, “Granny flats, from backyard and basement units to converted garages, are increasingly considered a potential source of lower-cost rental accommodation.”
“However, in many cities of the so-called global north, secondary dwellings are restricted under local planning rules designed to maintain lower-density residential neighbourhoods,” she said.
Currently, granny flat conditions vary significantly in state and council areas.
Granny Flats Could Devalue Properties
However, Thrive Construct Executive Chairman Barrie Harrop said carving away valuable garden space for granny flats would devalue properties and cause a lack of privacy on small blocks.“The blocks have become tiny across middle and outer Suburban areas of Metropolitan Australia; it’s only established inner Metropolitan suburbs with large blocks,” Mr. Harrop said.
Further, he said they cause a high family security risk.
“Having tenants in backyards would require additional security checks and cause privacy loss. Life revolving around tenants’ movements, friends, parties, socialising, and noise issues would generate lots of potential problems,” he said.
“Other issues could be around lack of electricity, water, sewerage, and stormwater services. Add this cost in, and it may need to be revised.”
Meanwhile, over 500,000 Australians are on official social dwellings waiting lists nationwide.
He added that in Eastern Australian states, the “desperate shortfall” of residential mid-rise apartments for essential workers is around 75,000 affordable dwellings annually over the next five to seven years.
Therefore, he called for an “urgent review” of low-density housing zoning near transport infrastructure (within an 800-metre radius of train stations) in the Eastern Australian states where “hundreds of billions of dollars of publicly funded infrastructure is mostly underutilised, among the world’s lowest density housing.”
Similarly, Australian Real Estate Expert and Property Advisor Veronica Morgan warned granny flats could lead buyers, particularly investors, astray.
“If the granny flat takes up most of the backyard, leaving the kids jumping on a trampoline in the front garden, future buyers won’t be jumping at that house,” Ms. Morgan said.
“If the house is on a huge block and the granny flat doesn’t compromise the outdoor space or the privacy of the main home, then perhaps self-contained accommodation is a great idea.
“Sure, you’ve added value but devalued the overall asset. Please don’t fall for the granny flat trap.”
