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Granny flats will continue to be a strong selling point for agents next year, as more buyers opt for second-dwelling strategies to build a steady income.
Granny flats have become an emerging trend over the last few years, with two-bedroom secondary dwellings in Sydney and Melbourne now earning investor-grade income, according to new data.
Fundd’s Building a Granny Flat in Australia: The Ultimate Guide showed that rental prices for two-bedroom granny flats in Sydney and Melbourne have been pushed to about $350 to $600 a week, with potential annual gross income ranging from $18,000 to $36,000 plus.
The findings followed data showing buyers were shifting towards more flexible and lower-cost housing options due to rising house prices, with searches for “granny flat”, “dual living”, and “duplex” surging nationwide.
Domain’s End of Year Wrap 2025 report found that “granny flat” and “dual” surged to the fourth and fifth most commonly searched terms nationally, while regional markets also saw the term “duplex” trend.
The surge of interest in granny flats followed planning reforms aimed at facilitating their development and providing investors with numerous opportunities, such as the changes introduced in Victoria in late 2023.
The new reforms enabled “secondary dwellings” of up to 60 sqm to be built without a planning permit in most residential zones, and rented to non-family tenants under standard tenancy law.
Other states, such as NSW, Queensland, South Australia, and Western Australia, have also introduced reforms that have shifted granny flats from restricted, family-only accommodation to income-producing residential infrastructure.
Domain’s head of research and economics, Dr Nicola Powell, said to leverage granny flats, agents needed to understand and target buyers’ searched keywords.
“For an agent, it’s about listing presentation and marketing and having the right keyword leverage, which could either open or expand their buyer pool,” she said.
Powell also said that understanding buyers’ keywords can help agents secure listings and evaluate homes more accurately.
“I do think the pricing valuation is an interesting one. If you’re adding a granny flat, what does that do to the valuation of your home? There will be a premium on properties that do have a granny flat,” she said.
According to Maple CEO Beau Arfi, the new reforms have enabled the development of tenant-ready dual-income properties that comply with guidelines.
He said demand for ready-to-go granny flat kits was increasing, with investors opting for dual-income strategies rather than just buy-and-hold single dwellings.
He said about 10 per cent of the company’s client base had been actively pursuing second-dwelling strategies, with the figure climbing sharply over the past year.
“Policy has opened the door, but delivery is what solves housing,” Arfi said.
“The bottleneck is no longer what is legal. It is how fast quality homes can be built, leased and integrated into long-term portfolio strategies.”
He also said granny flats were no longer a niche idea and were becoming core infrastructure for the next stage of residential supply.
“People are sitting on goldmines in their own backyards,” he concluded.
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