More than half a million home owners across Australia are sitting on ‘pots of gold’ and could be increasing the value of their property by up to as much as 30%, new research shows.
Analysis by CoreLogic and Archistar has revealed more than half a million homeowners across Australia have enough land to build a granny flat on their property, which could boost the value of their home by 30% and add around 27% in rental income.
An estimated 583,440 properties in Sydney, Melbourne and Brisbane meet the criteria for an additional self-contained unit of at least 60sqm.
Constructing a self-contained one-bedroom granny flat would require an initial outlay of $120,000, according to CoreLogic.
CoreLogic Head of Research, Tim Lawless, said granny flats are increasingly becoming an option for struggling homeowners.
“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,” Mr Lawless said.
“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.”
Co-founder of Archistar, Robert Coorey, said homeowners could be sitting on untapped income streams.
“Many homeowners 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,” Mr Coorey said.
Potential to shake up the housing market?
CoreLogic says granny flats might be the answer to alleviating housing affordability pressures.
“Homeowners could capitalise on the popularity of AirBnB and look at offering short-term accommodation to holidaymakers, or they could meet the demand for affordable housing by offering a long-term rental,” said Mr Lawless.
“Leasing a granny flat could be a popular alternative to leasing a typical unit because the rent tends to be less expensive. This is likely to appeal to many people on tighter budgets who would otherwise be priced out of their ideal area, and the research shows that many of the large blocks of land with potential for a granny flat are in affluent areas.”