Sydney’s rent squeeze, causing a demand shortfall, means climbing costs are extending to backyard granny flats, which are now commanding CBD-level prices.
The city’s secondary homes rent for $700 to $800 per week, with returns comparable to traditional investment properties, creating opportunities for homeowners and investors.
Listed at $720 per week is two bedroom granny flat 3A Stone Parade, Davidson.
According to agent Mayla Pilapil of LJ Hooker Narrabeen, granny flats are in higher demand compared to previous years as most potential tenants prefer to live in a house rather than an apartment, especially in the Northern Beaches as it is a family-oriented and pet-friendly location.
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Mayla Pilapil 3A Stone Parade two bedroom granny flat to rent for $720pw. Photo: Tim Hunter.
“The option for renters is more of a long-term rental home as we are seeing more apartments being sold due to the rising cost of living, including strata charges, council rates and water rates, as people move back or their children move in,” she said.
Ms Pilapil said the popularity of granny flats rose five to six years ago among many landlords who needed extra income to cover their mortgages.
“A few years ago, rent for a granny flat started at $500 to $600 a week,” she said.
“Since the middle of last year, the market has seen rents rise and depending on the location, these will rise even further.
“If this particular granny flat had been in Narrabeen it would have been rented for $850 a week.”
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Ms Pilapil said granny flats are a long-term investment for owners. Photo: Tim Hunter.
Ms Pilapil said for owners with a granny flat it is more of a long-term property investment as it provides additional income over time and offers tenants the opportunity to settle down.
“If the lease works out, it often offers a longer term, rather than the unit market often meaning tenants moving every 12 months,” she said.
Homeowner Joe Monaco said the experience renting out the space had been positive, with “some lovely tenants with a mix of young families and young couples”.
“We have been renting the granny flat for 2.5 years now and it has been good for our family,” he said.
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Mr Monaco said the granny flat was purposely built for rental opportunities
Mr Monaco said it was purposely built for rental opportunities and is also an easy way to downsize in the future.
“We have lived in the area for about nine years and the granny flat was built about three years ago,” he said.
New planning reforms have streamlined approvals and relaxed occupancy rules, allowing some secondary homes to be built and rented within five months, boosting supply in tight markets.
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Beau Arfi Maple Group. Image: supplied
Beau Arfi, CEO of Maple Property, said granny flats offer privacy that CBD rentals don’t often offer, and they also add more needed properties in under-supplied markets.
“Adding more stocks to the market is a good way to curb the supply problem,” he said.
“You might have 50 or 60 people at some auctions, especially in Sydney and NSW. If you can bring more of this supply to market it means the tenants who have missed out on some of these properties also get these opportunities.”
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Mr. Arfi outside his completed rental of a granny flat. Image: supplied
According to Mr Arfi, if investors and owners are willing to put the additional housing on their property, tenants can secure a home without having to move further from their desired locations.
“I think the number of granny flats will continue to grow and I think this is a big problem for the market as a whole,” he said.
“At the end of the day, granny flats are brand new properties, they can be refurbished really nicely, so they can really command a pretty penny, especially in NSW.”
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