The Cost of Housing in Australia: Unraveling the Granny Flat Solution

The Soaring Cost of Housing


If you’re like most Aussies, you’ve probably dreamt of owning your own home, the classic quarter-acre block with a barbie in the backyard and room for the kids to play. But as anyone who’s tried to take that leap from renter to homeowner recently knows, the Australian housing market has become a challenging landscape. Prices are skyrocketing, the number of homes available for sale is dwindling, and getting a loan approved feels more like an Olympic event than a routine financial procedure.

As of late, the median house price in Australia’s capital cities has soared to dizzying heights. Sydney, for example, continues to be the most expensive city, with median house prices breaching the million-dollar mark. Melbourne isn’t far behind. But it’s not just the big cities; regional Australia is also feeling the pinch as more people seek refuge from city prices.

The upshot? Buying a home in Australia has become an elusive dream for many.

The Consequences of the Housing Crisis

What does this mean for the average Aussie? It means more years of renting, compromising on living conditions, or even relocating to less desirable areas just to find somewhere affordable to live. It’s a scenario that sees many of us stuck in a perpetual rental cycle, trapped by high prices and fierce competition for limited housing stock.

This isn’t just about having a place to call your own. It’s about financial stability, creating a home for your family, and having a sense of community. When these things are out of reach, it can lead to feelings of frustration, anxiety, and helplessness.

And it’s not just individuals and families who suffer. The ripple effects of high housing costs impact our communities and our economy. High rental costs leave less disposable income to spend in local businesses. Commutes become longer as workers move further away from employment centres, adding stress and reducing family and leisure time.

Introducing the Practical Solution: The Granny Flat


Are you wondering if there’s a silver lining to the challenges that the current housing market presents?

Look no further than your own backyard – quite literally. The rise of granny flats – self-contained, compact living spaces situated on the same lot as a traditional home – is a promising response to the Australian housing crisis.

Named ‘granny flat’ for their original purpose of accommodating ageing relatives, these structures have evolved over time to serve a variety of purposes. Today, they function as everything from home offices to rental units, and importantly, as a more attainable housing option for those finding it tough to secure a spot on the property ladder.

But what’s driving their popularity? Primarily, it’s affordability. Granny flats demand less land and fewer resources, and they’re faster to construct than full-sized homes. This results in reduced construction costs and, in turn, lower purchasing or rental prices.

Granny flats also provide remarkable flexibility. They can serve as a temporary home for adult children saving to buy their own property, a rental unit to generate extra income, or a comfortable home for retirees looking to downsize. Plus, since they’re often located in established neighbourhoods, they offer easy access to local amenities and services.

As Australia’s population ages, granny flats are an increasingly attractive solution for families wishing to keep their loved ones nearby, while ensuring both parties maintain their privacy and independence.

The Evidence: Benefits of Granny Flats


Cost Savings

Granny flats represent a considerable saving compared to traditional homes. A CoreLogic report indicates that while the median house price in Sydney surpassed $1 million, the typical cost to build a granny flat in the same city ranges from $150,000 to $350,000, depending on its size and specifications.


Granny flats offer unmatched versatility. They can easily transition from a home office to a space for adult children, a rental property, or a comfortable home for ageing parents.

Increased Property Value

Granny flats can significantly enhance your property’s value. The 2019 CoreLogic/Archistart Granny Flat Report suggests that adding a granny flat could boost property values by up to 30% and increase rental income by approximately 27%.


Consider the example of the Johnson family from Sydney. In 2024, they decided to build a granny flat in their backyard for their adult son, struggling with high property prices. The project cost them $150,000. Their son could save on rent and accumulate a deposit for his own home while living in the granny flat.

Meanwhile, Susan and Mark, a Perth-based couple, built a granny flat on their property as a rental unit. The weekly rental income of about $300 significantly helped offset their mortgage repayments.

These scenarios,underscore the benefits of granny flats. They stand as cost-effective, flexible housing solutions with the potential to significantly boost property value.

The Wrap Up

Yes, the housing market in Australia is challenging, and the dream of owning a traditional home might feel increasingly out of reach. But remember, there’s more than one way to create a home. If you’re open to thinking outside the square and considering options like granny flats, you might find that the Australian dream is still within grasp.

So, while the housing market may seem daunting, remember, there’s always a solution out there. Granny flats are just one of the innovative and affordable ways that Aussies are redefining what it means to have a place to call home. As we continue to adapt and evolve, the dream of homeownership remains alive and well, taking on new forms that reflect our changing needs and circumstances. So, keep dreaming, keep exploring, and let’s redefine the Australian dream together.

Stefan Djuric
Stefan Djuric

My name is Stefan Djuric and I come from the town of Indjija. I love my job because it gives me the opportunity to learn something new every day, and I am fulfilled by its dynamic nature. In addition to my SEO career, I studied history at the University of Novi Sad. I also play drums in the pop/rock/funk band Dzajv, as well as in the thrash metal band Alitor, with which I have released two studio albums.