More than half a million home owners across Australia's eastern seaboard have enough space on their property to build a granny flat, which could boost home values by 30 per cent and add around 27% to rental income.
Combined analysis by CoreLogic and Archistar identified 583,440 properties in Sydney, Melbourne and Brisbane that meet the criteria for an additional self-contained unit of at least 60 square meters.
Constructing a two-bedroom granny flat would require an initial investment of around $200,000, while the outlay for a one-bedroom dwelling would be approximately $120,000.
CoreLogic Head of Research, Tim Lawless said: "Building a granny flat is becoming an increasingly compelling proposition for homeowners in a relatively lacklustre market. Not only can it help to manufacture new capital gains, but it has the potential to generate rental income while meeting demand for more affordable housing."
A granny flat typically rents out for less than the price of a standard apartment, making it an attractive and affordable option for renters on a budget.
"Many properties identified as suitable for a granny flat are in densely populated and traditionally expensive areas, such as Sydney's Northern Beaches or Hornsby. More granny flats on the rental market will make it easier for young people to stay in their preferred area, rather than move further afield to find value for money," Mr Lawless said.
Co-Founder of Archistar, Robert Coorey said: "Many home-owners are sitting on a pot of gold in the form of excess land that could be developed to generate a new income stream. This has wider economic benefits for renters who want to access popular suburbs without paying a premium."
"The family benefits of a secondary residency can't be overlooked, whether that's giving adult children more privacy while they save for a mortgage, keeping loved ones close as they become more reliant on care or having additional accommodation for overseas visitors," he continued.
Capitalising on this untapped potential for half a million additional dwellings could also deliver far reaching economic and social benefits, including greater employment opportunities for builders and other tradespeople.
"What is a relatively small outlay for home owners could boost the construction industry to the tune of $87.5bn and accommodate the growing population in some of the cities' most popular suburbs," Mr Coorey continued.
"While the benefits are tremendous, one minor watch out is regulation on second residencies, which tends to change state to state. Archistar's platform helps home-owners by instantly assessing thousands of zoning and planning laws and producing a report, so it's worth taking this step and consulting a local planning expert before you proceed," Mr Coorey said.