Sydney’s rental squeeze of undersupply to demand is seeing climbing costs stretching to backyard granny flats, which are now commanding CBD‑level prices.
The secondary dwellings across the city are renting out for $700 to $800 a week, with returns rivalling traditional investment properties, opening opportunities for homeowners and investors.
Listed for $720 per week is two-bedroom granny flat 3A Stone Parade, Davidson.
According to listing agent Mayla Pilapil of LJ Hooker Narrabeen, granny flats are more in demand in comparison to previous years as most prospective tenants would rather live in a house than in 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 renting for $720pw. Picture: Tim Hunter.
“The opportunity for renters is more of a long-term leased home, because we are finding that more apartments are being sold due to rising living costs, including strata levies, council rates, and water rates, because people are moving back or their children are moving in,” she said.
Ms Pilapil said granny flat popularity rose five to six years ago among many landlords who needed extra income to cover their mortgages.
“A couple of years ago, the rent for a granny flat started at $500 to $600 per week,” she said.
“Since mid-last year, the market has been seeing rents rise, and it will continue to rise, depending on the location.
“If this particular granny flat were in Narrabeen, it would have rented for $850 per week.”
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Ms Pilapil said granny flats are a long-term investment for owners. Picture: Tim Hunter.
Ms Pilapil said for owners with a granny flat, it’s more of a long-term investment property, as it provides extra income over time and offers tenants a chance to settle.
“If tenancy works out well, it often offers a longer term, instead that the unit market which can often mean tenants are on the move every 12 months,” she said.
Homeowner Joe Monaco said the experience renting out the space has been positive, with “some lovely tenants with a mixture of young families and young couples”.
“We have been renting the granny flat now for 2.5 years and it has been beneficial 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 also an easy way of downsizing in the future.
“We have been living in area approximately nine years and the granny flat was built approximately three years ago,” he said.
New planning reforms have streamlined approvals and widened occupancy rules, enabling some secondary dwellings to be built and leased within five months, boosting supply in tight markets.
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Beau Arfi Maple Group. Picture: Supplied
Beau Arfi CEO of Maple Property said granny flats offer privacy that CBD rentals do not often have as well as add more needed properties in undersupplied markets.
“Adding more stock to market is a good way to curb the supply issue,” he said.
“You might have 50 or 60 people at some auctions particularly in Sydney and NSW, if you can start to bring more of this supply to market its going to mean those tenants that have missed out on some of these properties – are also getting these opportunities.”
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Mr Arfi outside his completed granny flat rental. Picture: Supplied
According to Mr Arfi, if investors and owners are willing to include the extra dwelling on their property, tenants are able to secure a residence without needing to relocate further from desired locations.
“I think the granny flat space is going to keep growing and I think it’s a major issue in the market as a whole,” he said.
“At the end of the day, granny flats are brand new properties, they can be specked up really nicely, so they can demand a pretty penny really, especially in NSW.”
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