Sydney property buyers are seeking granny flats to allow for multi-generational living, boost their property’s value and to use as an extra living space.
“Granny flat” was the second-highest search term on property listings website domain.com.au in Sydney in 2025, outranked only by “pool”.
A listing in Hillcrest Avenue, Mona Vale, with price hopes of about $6 million comes with a granny flat that some prospective buyers want to use as an office.Credit: Raine & Horne Northern Beaches
Wally Gebrael, design and approvals manager at granny flat building company Granny Flat Solutions, said he had noticed many “savvy” investors jumping on board the trend.
Rather than buying another property, they are investing $200,000 in building a granny flat, and getting another source of income, he said.
Another common scenario is parents who build a separate space to downsize to so they can leave the main house for their children and grandchildren. Or parents build a space for a younger couple, such as newlyweds, to give them a head start.
Other families request the separate build as a recreational or hobby area.
Gebrael has been building granny flats for Sydneysiders since 2011 and said the company had gone from building eight secondary dwellings in its first year to completing 300 granny flats in the past 12 months.
He said a granny flat is more formally known as a “secondary dwelling”, and its maximum size in NSW is 60 square metres.
He said that, typically, 60 square metres allows for two bedrooms, a bathroom and an open-plan kitchen and dining space. He added that decks, verandahs, car ports or garages could be built in addition to the dwelling.
NAB executive for home lending Denton Pugh has noticed a 21 per cent increase in home renovation loans since last year and said some of this was used for granny flats, due to an undersupply of homes relative to demand that has made it challenging to buy a home.
“That’s why we’re seeing … people getting more innovative in terms of the way that they’re using their current residence to improve or expand living quarters,” he said.
He said the main reasons were multi-generational living due to ageing parents or the cost of living, clever investors optimising the value of their properties, and a wellbeing purpose, “whether they’re putting in a gym and an ice bath and a sauna … a Pilates studio, an art studio … working from home in a more regional area”.
NAB client Haydan Andrews, 25, bought a property he is leasing out in Wallsend, a suburb of Newcastle, for $655,000 in 2023.
Haydan Andrews is building a granny flat.Credit: Sam Mooy
Andrews wanted to add value but initially wasn’t sure how. He considered renovating, extending, or knocking it down completely and redeveloping.
He said that extending the home was going to cost at least $100,000, which would not make much difference if he were to sell or rent it out.
He thought building a two-bedroom granny flat for $260,000, while not cheaper, would add the most value long term to his property.
Building began on the project four months ago and is almost complete. It was important to Andrews to build the secondary dwelling with privacy for both tenants in mind so that they would feel comfortable. He wanted it to be appealing to families to live in long term.
Haydan wanted to add value to his purchase.Credit: Sam Mooy
“Mathematically mortgage-wise, it had to make sense to me, because I didn’t want to be significantly out of pocket and negatively geared heavily for doing this development,” he said, adding the two separate dwellings should both pay for themselves.
“Based on some of the evaluations that I’ve had from NAB, which are obviously rough estimations, yes, I believe that return on investment would come back.”
Other homes are offering granny flats at higher price points.
In Freshwater, selling agent Mike Dunn from Clarke & Humel Property has for sale a designer beach house with “one of the best granny flats” he has ever listed.
The two-storey secondary dwelling with separate street access at 9 Moore Road was built for dual living for long-stay visitors. Price expectations for the compound are $7.4 million, he said.
“People love it. That’s the main … allure of that property,” he said.
“It’s that good. This one, you could actually stay in that and rent the house out.”
Selling agent Ben Spackman from Raine & Horne Northern Beaches has a coastal listing in Mona Vale with price hopes of circa $6 million that comes with a granny flat.
Buyers at inspections for the ocean-view home at 7 Hillcrest Avenue have mostly been interested in the income upside while some have mentioned using it as an office space.
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