Homeowners and property investors across Australia are rethinking what their backyards can offer, as councils and state governments make it easier than ever to build a second dwelling. The shift has sparked a surge in demand for granny flats, according to major banks, builders and industry groups.
Former mortgage broker and Maple Property Group CEO Beau Arfi said interest in small secondary builds has jumped sharply in Melbourne. “We’re seeing quite a decent uptick,” he told Yahoo Finance. “Originally around one in five of our investors were looking at granny flats, but now around half of them are considering it. And if they’ve got the capacity, most of them are jumping on it.”
Arfi said the trend has accelerated over the past six months, particularly among new landlords searching for ways to boost rental returns. With major banks now supporting finance for these projects and councils increasingly open to the idea, the pathway has become far smoother.
“In many cases, the planning permits aren’t required. It’s just a build permit,” he said.
Victoria Leads the Charge With New Rules
Victoria recently overhauled its planning laws, replacing the old system that allowed only dependent person’s units (DPUs) movable dwellings intended for relatives reliant on the main household.
Under the new framework, homeowners can now build a Small Second Dwelling (SSD) of up to 60 square metres, complete with a kitchen and bathroom, and rent it out to anyone. In most situations, no planning permit is needed.
The transition period ends Saturday, March 28, meaning all new granny flats in the state must comply with the updated SSD regulations from that date.
As housing pressures intensify nationwide, the humble granny flat is fast becoming a strategic investment and a key part of Australia’s evolving property landscape.
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