Australia has a housing problem. Are granny flats the solution to the crisis?

Like many other developed nations, Australia is grappling with a housing crisis. The combination of soaring rental rates, a growing number of single-occupant households, and increasing migration levels have resulted in a severe shortage of affordable housing options, creating a supply-demand imbalance.
But how bad is the problem? A recent report released by CoreLogic, Archistar, and Blackfort in October 2023, highlights a simple solution to this crisis - the development of granny flats.
The report points out that the country is expected to face a shortfall of 106,300 homes over the next five years. While the Australian government has set an ambitious target of 1.2 million well-placed homes to tackle the issue, proposed solutions such as build-to-rent developments and social & affordable housing are constrained by long lead times, regulatory, zoning issues, and industry shortages.
So, taking this into consideration, the report looked at residential blocks across Sydney, Melbourne, and Brisbane and suggests constructing granny flats as an immediate and cost-effective solution. These are self-contained one to two-bedroom dwellings of at least 60 square metres that can be pre manufactured and installed within existing town planning guidelines.
Where are the best Granny flat development opportunities?
Based on the analysis from Archistar, Blackfort, and CoreLogic, over 655,000 residential properties are suitable for a granny flat across Australia’s three largest capitals. Over a third of these sites are within 2km of a train or light rail station, and 17% have a hospital within the suburb boundary, indicating their potential to provide housing for essential workers in the healthcare sector.
Of the three cities analysed, Sydney has the most opportunities for granny flat developments at 242,081 properties. Looking more broadly at Sydney council areas, the Central Coast has the most opportunities for granny flats at 41,569 or 17.2% of potential sites followed by the Northern Beaches at 19,884 or 8.2%.
Melbourne was found to have 230,000 potential sites with Mornington Peninsula the largest opportunity in the broader Melbourne region at 23,870 sites or 10.4% of total sites. This was followed by Casey at 16,861 (7.4%). Brisbane was found to have about 185,000 suitable sites. In Greater Brisbane, the Brisbane LGA by far has the most opportunities at 184,660 or 40.5% of potential sites.
Granny flats an opportunity for investors?
For homeowners, adding a granny flat not only increases the value of their property but also provides an opportunity for additional rental income. For policymakers and the government, granny flats present an immediate and affordable way to meet the housing demand within existing town planning guidelines.
“Adding a granny flat accommodates extra living space for extended family, multi-generational households or rental purposes, thereby boosting a property's value and potentially creating extra income for rising living costs.” CoreLogic Research Director Tim Lawless said.
“CoreLogic figures show an extra two bedrooms, and an additional bathroom could add around 32% to the value of an existing dwelling. For a house worth $500,000, the addition of a granny flat has the potential to add approximately $160,000 to the value of the property.”
Looking for a home loan or considering refinancing? Check out some of the providers below and compare today.
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Promoted
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- Low Cost Home Loan - 2025
Unloan Variable Home Loan
- Investor
- Principal & Interest
- 20% min deposit
- Redraw available
- Interest rate
-
6.04
%
p.a.
Variable
- Comparison rate
-
5.95
%
p.a.
- Initial monthly repayment
-
$3,011
- Built by CommBank
- The first home loan with an increasing discount (conditions apply)
- No application or banking fees
- interest rate
-
6.04% p.a. (5.95% p.a. comparison rate)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$0.00
- Ongoing fees
-
$0.00
- Discharge Fee
-
$0.00
- Package
-
-
- Maximum loan to value ratio
-
80.00%
- minimum borrowing amount
-
$10,000
- maximum borrowing amount
-
$10,000,000
- type of mortgage
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Variable
- Repayment types
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Principal & Interest
- Availability
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Investor
- Repayment options
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Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
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yes - free
- Minimum redraw amount
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-
- Offset account
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no
- Split account
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no
- Other restrictions
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-
- Other benefits
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Rate automatically discounted by 0.01% p.a. every year up to a maximum discount of 0.30% p.a..
- Special Offers
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-
Read reviews and learn more about Unloan home loans
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- Offset Home Loan - 2025
- First Home Buyer Loan - 2025
Variable Home Loan
- Investor
- Principal & Interest
- 10% min deposit
- Offset available
- Redraw available
- Interest rate
-
6.14
%
p.a.
Variable
- Comparison rate
-
6.18
%
p.a.
- Initial monthly repayment
-
$3,043
- $0 application fee to pay
- Only 10% deposit required
- Apply in as little as 15 minutes
- interest rate
-
6.14% p.a. (6.18% p.a. comparison rate)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$495.40
- Ongoing fees
-
$0.00
- Discharge Fee
-
$325.00
- Package
-
-
- Maximum loan to value ratio
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90.00%
- minimum borrowing amount
-
$50,000
- maximum borrowing amount
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$3,000,000
- type of mortgage
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Variable
- Repayment types
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Principal & Interest
- Availability
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Investor
- Repayment options
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Weekly, Fortnightly, Monthly
- Extra repayments
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yes - free
- Redraw facility
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yes - free online, fees apply for assisted redraws
- Minimum redraw amount
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$1.00
- Offset account
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yes - optional for $10 per month - comparison rate does not include this fee.
- Split account
-
-
- Other restrictions
-
Settlement fee comprises of upfront fee and loan processing fee. Valuation fee varies. Comparison rates displayed do not take into account the Optional Offset Account monthly fee.
- Other benefits
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-
- Special Offers
-
-
Read reviews and learn more about NRMA Home Loans home loans
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- First Home Buyer Loan - 2025
Variable Investor Home Loan
- Investor
- Principal & Interest
- 10% min deposit
- Offset available
- Redraw available
- Interest rate
-
6.09
%
p.a.
Variable
- Comparison rate
-
6.13
%
p.a.
- Initial monthly repayment
-
$3,027
- interest rate
-
6.09% p.a. (6.13% p.a. comparison rate)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$530.00
- Ongoing fees
-
$0.00
- Discharge Fee
-
$0.00
- Package
-
-
- Maximum loan to value ratio
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90.00%
- minimum borrowing amount
-
$50,000
- maximum borrowing amount
-
$2,000,000
- type of mortgage
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Variable
- Repayment types
-
Principal & Interest
- Availability
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Investor
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$0.00
- Offset account
-
yes
- Split account
-
yes
- Other restrictions
-
Offset sub-account available for additional +0.10%. $300 discharge fee and $250 discharge documentation fee applicable if loan doesnt go to full term.
- Other benefits
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-
- Special Offers
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-
Read reviews and learn more about loans.com.au home loans
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Fixed Home Loan
- Fixed rate
- Investor
- Principal & Interest
- 10% min deposit
- Redraw available
- Cashback
- Interest rate
-
5.79
%
p.a.
Fixed 2 years
- Comparison rate
-
6.26
%
p.a.
- Initial monthly repayment
-
$2,931
- Get up to $4,000 cashback (T&Cs apply)
- Up to 12 months repayments in advance without penalties
- Split loan available
- interest rate
-
1 year - 5.99% p.a. (6.33% p.a. comparison rate)
2 years - 5.79% p.a. (6.26% p.a. comparison rate)
3 years - 5.79% p.a. (6.22% p.a. comparison rate)
5 years - 5.99% p.a. (6.24% p.a. comparison rate)
- Fixed loan revert rate
-
6.29% p.a.
- Upfront fees
-
$799.00
- Ongoing fees
-
$6.00 monthly
- Discharge Fee
-
$350.00
- Package
-
-
- Maximum loan to value ratio
-
90.00%
- minimum borrowing amount
-
$10,000
- maximum borrowing amount
-
$5,000,000
- type of mortgage
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Fixed
- Repayment types
-
Principal & Interest
- Availability
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Investor
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free up to 1 year in advance
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$500.00
- Offset account
-
no
- Split account
-
yes
- Other restrictions
-
Monthly fee only applies to fixed period of loan.
- Other benefits
-
-
- Special Offers
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$4,000 cashback for loans $750,000 and above with a maximum LVR of 80%, settled within 90 days of application for refinancers or 180 for purchase loans. $3,000 for loans between $500k and $749k, $2,000 for loans between $250k and $499k.
Read reviews and learn more about IMB Bank home loans
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Home Loan
- Investor
- Principal & Interest
- 40% min deposit
- Redraw available
- Interest rate
-
5.81
%
p.a.
Variable
- Comparison rate
-
5.82
%
p.a.
- Initial monthly repayment
-
$2,937
- Offset and non-offset options for flexible payments
- No application and monthly account keeping fees
- Get up to $4,000 cashback (T&Cs apply)
- interest rate
-
5.81% p.a. (5.82% p.a. comparison rate)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$250.00
- Ongoing fees
-
$0.00
- Discharge Fee
-
$250.00
- Package
-
-
- Maximum loan to value ratio
-
60.00%
- minimum borrowing amount
-
$100,000
- maximum borrowing amount
-
-
- type of mortgage
-
Variable
- Repayment types
-
Principal & Interest
- Availability
-
Investor
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$500.00
- Offset account
-
no
- Split account
-
no
- Other restrictions
-
Valuation fee payable at cost
- Other benefits
-
-
- Special Offers
-
-
Read reviews and learn more about Regional Australia Bank home loans
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Solar Home Loan
- Investor
- Principal & Interest
- 10% min deposit
- Offset available
- Redraw available
- Interest rate
-
5.94
%
p.a.
Variable for 60 months and then 6.48% p.a.
- Comparison rate
-
6.28
%
p.a.
- Initial monthly repayment
-
$2,978
- Unlimited additional repayments
- Option offset sub-account
- No ongoing fees to pay
- interest rate
-
6.48% p.a. (6.28% p.a. comparison rate)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$530.00
- Ongoing fees
-
$0.00
- Discharge Fee
-
$550.00
- Package
-
-
- Maximum loan to value ratio
-
90.00%
- minimum borrowing amount
-
$50,000
- maximum borrowing amount
-
$1,500,000
- type of mortgage
-
Variable
- Repayment types
-
Principal & Interest
- Availability
-
Investor
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$0.00
- Offset account
-
yes
- Split account
-
yes
- Other restrictions
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Only available for homes with a solar system.
- Other benefits
-
Offset sub-account available for an additional 0.10% p.a.
- Special Offers
-
-
Read reviews and learn more about loans.com.au home loans
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Neat Home Loan
- Investor
- Principal & Interest
- 40% min deposit
- Redraw available
- Interest rate
-
5.99
%
p.a.
Variable
- Comparison rate
-
6.01
%
p.a.
- Initial monthly repayment
-
$2,995
- Free extra repayments
- Easy redraw facility
- No annual fee to pay
- interest rate
-
5.99% p.a. (6.01% p.a. comparison rate)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$250.00
- Ongoing fees
-
$0.00
- Discharge Fee
-
$300.00
- Package
-
-
- Maximum loan to value ratio
-
60.00%
- minimum borrowing amount
-
$80,000
- maximum borrowing amount
-
$5,000,000
- type of mortgage
-
Variable
- Repayment types
-
Principal & Interest
- Availability
-
Investor
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
-
- Offset account
-
no
- Split account
-
no
- Other restrictions
-
If the valuation is over $360, ubank will cover the first $360. Home loans with a term of greater than 30 years will only be available for owner-occupied P&I 80% LVR purchase applications.
- Other benefits
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-
- Special Offers
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-
Read reviews and learn more about ubank home loans
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Mozo experts choice awards won:
- Low Cost Home Loan - 2025
Simple Home Loan Variable
- Investor
- Principal & Interest
- 40% min deposit
- Redraw available
- Interest rate
-
5.99
%
p.a.
Variable
- Comparison rate
-
6.02
%
p.a.
- Initial monthly repayment
-
$2,995
- No application, ongoing or monthly fees
- Make additional repayments at any time
- Access your money via internet banking at any time
- interest rate
-
5.99% p.a. (6.02% p.a. comparison rate)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$400.00
- Ongoing fees
-
$0.00
- Discharge Fee
-
$175.00
- Package
-
-
- Maximum loan to value ratio
-
60.00%
- minimum borrowing amount
-
$150,000
- maximum borrowing amount
-
$3,500,000
- type of mortgage
-
Variable
- Repayment types
-
Principal & Interest
- Availability
-
Investor
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$0.00
- Offset account
-
no
- Split account
-
yes
- Other restrictions
-
-
- Other benefits
-
-
- Special Offers
-
-
Read reviews and learn more about First Option Bank home loans
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Flex Home Loan
- Investor
- Principal & Interest
- 40% min deposit
- Offset available
- Redraw available
- Interest rate
-
5.99
%
p.a.
Variable
- Comparison rate
-
6.23
%
p.a.
- Initial monthly repayment
-
$2,995
- Multiple offset accounts available
- Free extra repayments
- Easy redraw facility
- interest rate
-
5.99% p.a. (6.23% p.a. comparison rate)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$250.00
- Ongoing fees
-
$250.00 yearly
- Discharge Fee
-
$300.00
- Package
-
-
- Maximum loan to value ratio
-
60.00%
- minimum borrowing amount
-
-
- maximum borrowing amount
-
-
- type of mortgage
-
Variable
- Repayment types
-
Principal & Interest
- Availability
-
Investor
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
-
- Offset account
-
yes
- Split account
-
yes
- Other restrictions
-
If the valuation is over $360, ubank will cover the first $360. Home loans with a term of greater than 30 years will only be available for owner-occupied P&I 80% LVR purchase applications.
- Other benefits
-
-
- Special Offers
-
-
Read reviews and learn more about ubank home loans
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Flex Home Loan
- Fixed rate
- Investor
- Principal & Interest
- 40% min deposit
- Offset available
- Redraw available
- Interest rate
-
5.99
%
p.a.
Fixed 2 years
- Comparison rate
-
6.23
%
p.a.
- Initial monthly repayment
-
$2,995
- Multiple offset accounts available
- Free extra repayments
- Easy redraw facility
- interest rate
-
1 year - 6.15% p.a. (6.25% p.a. comparison rate)
2 years - 5.99% p.a. (6.23% p.a. comparison rate)
3 years - 5.99% p.a. (6.23% p.a. comparison rate)
5 years - 5.99% p.a. (6.23% p.a. comparison rate)
- Fixed loan revert rate
-
5.99% p.a.
- Upfront fees
-
$250.00
- Ongoing fees
-
$250.00 yearly
- Discharge Fee
-
$300.00
- Package
-
-
- Maximum loan to value ratio
-
60.00%
- minimum borrowing amount
-
-
- maximum borrowing amount
-
-
- type of mortgage
-
Fixed
- Repayment types
-
Principal & Interest
- Availability
-
Investor
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
-
- Offset account
-
yes
- Split account
-
yes
- Other restrictions
-
If the valuation is over $360, ubank will cover the first $360. Home loans with a term of greater than 30 years will only be available for owner-occupied P&I 80% LVR purchase applications.
- Other benefits
-
-
- Special Offers
-
-
Read reviews and learn more about ubank home loans
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Your selected home loans
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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