Home revolution rocking Sydney suburbia – granny flats

It’s the revolution rocking Sydney suburbia – and it’s coming to a backyard near you.

Demand for granny flats and garden apartments has exploded following the record interest rate rises over the last year, with homeowners using the secondary dwellings as rentals to help with mortgage bills or as accommodation for family members struggling with cost of living increases.

Others are moving into cheaper granny flats while renting out the main house on their properties to save money.

Data from Oneflare and Airtasker showed requests for granny flat additions rose 67 per cent over the past year.

It followed a wider increase in installation requests for other income generating assets for residential properties, including solar panels.

Newlyweds Vera and Anthony Ippolito began constructing a granny flat at the back of Anthony’s parents’ property in Ashbury in November last year.

The pair have spent just over $200,000 on the two bedroom granny flat, and are hoping to move into the space next month.

Mrs Ippolito told The Daily Telegraph that the money they spent on constructing the granny flat would still be more affordable than buying a home.
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‘We purchased our first property in Blacktown in 2017, and have since used it as an investment property while we looked to buy a place in the inner west.”

“The idea of building a granny flat at the back of Anthony’s place started off as a joke, but we shopped around for homes in the area and quickly found ourselves unable to afford a place.”

Born in Abbotsford, Mrs Ippolito said the couple had wanted to find a home and start a family in the next 12 months.

Despite expanding their search to suburbs like Five Dock, Lewisham and Petersham, they found they were priced out of the area.

“We’re hoping to generate extra income via our investment property in Blacktown and by building this granny flat, ultimately save up to purchase a proper home.”

According to the Australian Bureau of Statistics (ABS), there were 10,852,208 private dwellings in Australia in 2021. Of these, 31 per cent were rented.
This means that there were approximately 3,374,284 rental dwellings in Australia in 2021.
Of the rental dwellings, 70 per cent were separate houses, 13 per were townhouses, and 16 per cent were apartments.
Suburbstrends founder Kent Lardner said that a number of states across Australia introduced regulations for granny flat applications to be fast-tracked and exempted from local government approval under specific conditions.

“NSW has specific regulations for granny flats, including a limitation of 60 sqm for the maximum floor area and a minimum lot size of 450 sqm.
“A granny flat in the Central Coast can add between $344 to $430 per week or in Blacktown between $322 and $400 to a rental property or to a struggling mortgagee.
The biggest upside is that we can still potentially add tens of thousands of these across Australian rental hot spots relatively quickly via prefabricated buildings. However the impact on their advantages might restrict this option to current rental properties only, which reduces the potential significantly.”

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Rebecca Jarrett-Dalton is a mortgage broker for Sydney-based outlet Two Red Shoes, and said that the main demographic of clients looking to add a granny flat to an existing property tended to be young families.

Many of her clients who are approaching her for loans are asking for fixed rate mortgages, since there is uncertainty about future interest rate rises.

Ms Jarrett-Dalton had heard similar stories from homeowners in regional towns like Goulburn and Tamworth, with those areas seeing a spike in property prices in the wake of the pandemic.

“It’s no longer just buyers relying on the bank of Mum and Dad, they’re now relying on the house of Mum and Dad too.

“Regional customers who come to me are facing the issue of having to build properties with separate living spaces in order to get a greater profit to pay off their mortgage.

“While there is less of an issue with space compared to their urban counterparts, the financial setbacks in terms of construction costs and upkeep remain too high.”

Property investment companies are increasingly turning their eyes to old and established homes for their clients to transform and add additional living spaces.
Ultan Mooney is an agent for Hibernian Wealth, and believes that the strong cash flow from living in a granny flat while renting out an investment property is a good idea.

“Having a strong rental income while buyer lives in another property puts them in a good position if the market destabilises or rate continue to rise.
“I believe the issue for many mortgage holders right now is their yield holding capacity. They may have bought in cheap after the pandemic, but now their debts can’t be easily serviced without high incomes.
“Granny flats are an easy way for homeowners or buyers to live in an area that they couldn’t otherwise afford, and for owners looking to rent them out for $400 a week – it could be a spectacular return on investment. The demand we’ve seen for new properties with granny flats in regional areas is red hot.”

A number of buyers are also downsizing to apartments that cost less after strata fees.

These include younger downsizers, as well as people aged in their 40s that are selling larger homes and choosing the smaller but more affordable dwellings.

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