New data has found which suburbs in some of Australia’s major capital cities are most suitable for subdivision, with the claims that doing so could increase a property’s value by as much as 30 per cent and rental income by 27 per cent.
In a joint report by CoreLogic and Archistar, 583,440 properties across Sydney, Melbourne and Brisbane meet the requirements for the addition of one granny flat: a minimum of a spare 60 square metres.
By doing so, according to the report, property owners can add up to around 30 per cent to the value of the property.
Tim Lawless, head of research at CoreLogic, said that constructing granny flats has become an “increasingly compelling proposition” for property owners.
“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 Chapel Hill or The Gap.
“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.”
Robert Coorey, co-founder of Archistar, said that many property owners were “sitting on a pot of gold” due to owning enough land that could be turned into an additional revenue stream.
“This has wider economic benefits for renters who want to access popular suburbs without paying a premium,” he said.
“The family benefits of a secondary residency can’t be overlooked, whether that’s giving adult children more privacy while they save for a mortgage, keeping loved ones close as they become more reliant on care or having additional accommodation for overseas visitors.”
“What is a relatively small outlay for home owners could boost the construction industry to the tune of $87.5 billion and accommodate the growing population in some of the cities’ most popular suburbs.”
The Brisbane area was the major capital city with the highest proportion of properties that held potential for granny flat inclusion at 21.6 per cent of all properties, or 204,598 properties.
The Gap was the suburb that held the largest number of properties that could include a granny flat at 2,784, or 42.8 per cent, while proportion-wise Ferny Hills has the largest portion of the suburb with granny flat potential at 69.5 per cent.
The most affordable suburb with granny flat potential was Gailes with a median value of $275,037 and having 397 properties with enough space for a granny flat, representing 50.8 per cent of properties in the suburb.
Meanwhile, Kingston, with its median value of $289,193, offers investors the highest yield for suburbs with subdivision potential at 6.2 per cent, with 747 properties able to be subdivided, or 44.1 per cent of properties in the suburb.
The top 18 suburbs in Brisbane for granny flat potential by number of properties that have enough space to include a granny flat, according to CoreLogic and Archistar, are: