We Tracked Granny Flat Sales Across 6 Melbourne Suburbs. The Price Premium Is $100K-$200K.

I'm going to show you something that changed how I think about granny flats entirely.

Most investors build a granny flat for the rental income. And fair enough — an 18-square-metre studio renting at $340 to $380 a week on a build cost of $110,000 is roughly 18% gross yield. That's a solid return by anyone's measure.

But here's what caught my attention when I started pulling comparable sales data across our six core suburbs: properties with existing granny flats are consistently selling for $100,000 to $200,000 more than comparable houses on the same street without one.

That means a $60,000 to $110,000 granny flat isn't just generating $370 a week in rent. It's lifting your entire property value by double or triple the construction cost.

I realised this when we analysed a batch of 30 comparable sales across our six core suburbs and isolated the granny-flat variable. Same street. Similar block size. Similar house condition. The only differentiator: one property had a granny flat, one didn't. In every single case — every single one — the granny flat property sold for more than the premium you'd pay to build one.

That's not a rental play anymore. That's a capital play that happens to also generate rent.

I'm going to walk through six real suburbs with real transaction data. No theoretical modelling. No builder marketing brochures. Just auction results and private sale figures from the past 18 months, suburb by suburb.

Thomastown: the Growth Zone premium

Thomastown sits in Melbourne's northern corridor and parts of it fall under Growth Zone, meaning you can build higher density. We like certain pockets here — the ones with rezoning potential.

Let me give you the baseline for standard houses in our target pocket:

• 663sqm, older home: $721,000
• 517sqm: $703,000
• 650sqm: $670,000
• 652sqm: $740,000

So for a standard house on 600-660 square metres, you're looking at high $600s to low $700s. The median sits around $710,000.

Now here's the one that turned heads. A 646-square-metre block in the same pocket — comparable land size, comparable street — but this one had an existing granny flat. It sold at auction for $911,000.

That's a premium of roughly $200,000 over comparable sales.

Someone paid $200,000 extra for a granny flat that probably cost $80,000 to $100,000 to build. The buyer got a functioning dual-income property. The seller pocketed a massive return on a relatively small construction investment 1.

"I watched the auction and thought, someone just paid $200K for a granny flat that costs $60K-$100K to build," says Joey Don. "That's when I stopped thinking about granny flats as rental assets and started thinking about them as capital assets."

Cranbourne: our backyard, our data

Cranbourne is one of our core operating suburbs. We buy here regularly, so I know the price texture street by street.

Recent comparable sales without granny flats:

• 651sqm, purchased 2023: $550,000 (worth approximately $650,000 today — a 9% annual growth rate even in a flat market, which is telling)
• 644sqm: $575,000
• 646sqm: $603,000
• 600sqm: $607,000

Baseline for the pocket: $550K to $610K on 600-650 square metre blocks.

Then comes the outlier. Same street. 650 square metres. One existing granny flat. Sale price: $715,000.

That's $105,000 to $115,000 above the street average. And this is Cranbourne — entry-level Melbourne southeast, where every dollar of premium needs to be justified to buyers.

Another data point worth noting: the 2023 sale at $550K on 651sqm is now worth $650K in mid-2023. That's roughly $100,000 of growth in under two years, in a market that everyone says is going sideways. If you picked the right pocket and the right block, Melbourne's southeast hasn't stopped growing. It's just been selective about where 2.

Build a granny flat in this pocket for $110,000 plus GST. Collect $370 a week in rent. And your property is now worth $100K-plus more than the house next door. The maths is not subtle.

Dandenong North: proof you must pick the right pocket

Dandenong North is a suburb that terrifies some investors. Parts of it have genuine safety concerns. I'll be blunt — certain streets border high-crime pockets, and if you buy blind, you could end up neighbours with people you don't want to be neighbours with.

But there are micro-pockets within Dandenong North that are quietly performing.

Our target pocket, standard sales:

• 552sqm: $650,000
• 527sqm: $660,000
• 513sqm: $630,000

Baseline: $630K to $660K on 500-550sqm blocks. Reasonable for the area.

The granny flat property: 534sqm, with an 18-square-metre compliant granny flat. Sale price: $800,000.

That's $140,000 to $170,000 above comparable sales. On a block that's actually smaller than two of the three comparables.

The lesson here isn't just about granny flat premiums. It's about pocket selection. In Dandenong North, one street can be a solid investment and the next can be a write-off. Our team inspects these blocks in person, talks to neighbours, checks the police database for the area, and reviews council planning applications before recommending anything 3.

But if you nail the pocket, the numbers are extraordinary. A $60,000 granny flat turned a $650K property into an $800K property.

Berwick: a cautionary tale with a silver lining

Berwick is one of our other operating bases. It's a premium southeast suburb — good schools, higher household incomes, strong family demographic.

But this particular pocket is actually a reverse recommendation. I'm including it to show that granny flat premiums exist everywhere, even in pockets we'd normally steer clients away from.

Baseline comparables:

• 650sqm: $670,000
• 633sqm (new house): $745,000
• 749sqm: $745,000

The granny flat property: sold for $950,000.

That's a $200,000-plus premium. An 18-square-metre granny flat in Berwick added two hundred thousand dollars to the resale value.

Now, I wouldn't recommend buying in this specific Berwick pocket if your budget allows alternatives — there are better micro-locations within the suburb. But the data point is undeniable: the market values dual-income properties aggressively, even in areas where the underlying fundamentals are average.

At $110,000 build cost for an 18sqm granny flat that rents for $340-$380 a week (that's roughly $18,000-$20,000 a year in rent) AND lifts your property value by $200,000... you'd struggle to find a renovation project in any asset class with a better return profile 4.

Frankston: the infrastructure boom suburbs

Frankston is having a moment. The $1 billion public hospital expansion, rezoning activity, and improved transport links have pushed buyer demand significantly over the past two years.

Our pocket comparables:

• 627sqm: $670,000
• 614sqm: $640,000
• 642sqm: $685,000
• 584sqm: $690,000

Baseline: $640K to $690K.

The granny flat property: 632sqm, with a 30-square-metre granny flat. Sale price: $890,000.

That's a $200,000 premium. Consistent with what we're seeing across every suburb.

The 30sqm granny flat is worth highlighting. The build cost at that size is around $110,000 plus GST (our standard 30sqm runs at this price point), and rental income is $340-$360 per week before bills 5. Some operators charge $370-$390 including bills for the tenant.

Frankston's vacancy rate is sitting below 1.5%, so finding a tenant for either the main house or the granny flat takes us an average of two weeks. Demand is outstripping supply at every price point in this corridor.

"Frankston is where infrastructure money and housing scarcity collide," says Joey Don. "A $670K house with a $110K granny flat renting for a combined $950-plus a week, and the property's now worth $890K. That's a return on construction cost that makes most stock portfolios look pedestrian."

Narre Warren South: where we're betting big in 2023-24

I'll finish with our 2023-24 conviction bet. Narre Warren South checks every box we look for: established infrastructure, high household incomes, low vacancy, and constrained land supply.

The baseline sales:

• 672sqm: $770,000
• 500sqm: $780,000
• 630sqm: $765,000

Solid baseline. These are well-established family homes.

The granny flat property: 18-square-metre compliant granny flat. Sold in 2023 for $955,000.

Premium: approximately $185,000 above comparable sales.

At this price point, we're looking at total dual-income rent of $900 to $1,000 per week (main house plus granny flat). On a $955K purchase, that's a gross yield of 4.9% to 5.4% — exceptionally strong for a suburb at this price level.

For context, a standard Narre Warren South house without a granny flat yields around 3.5% gross. The granny flat doesn't just add rent — it shifts the entire investment equation from negatively geared to cash-flow positive 6.

How we build a granny flat for $60K-$110K (and why that number matters)

I get asked this constantly, so let me address it.

Our standard 18-square-metre granny flat — the one renting at $340-$380 a week across all six suburbs above — has a base cost around $60,000 to $65,000 for the structure and installation. Including foundations, connections, basic fit-out and compliance, the all-in cost comes to approximately $110,000 plus GST for our 30sqm model.

How? Three things.

First, we designed the floor plan ourselves. I spent months optimising the layout for maximum rental return per square metre. Every millimetre is considered — the kitchenette placement, the bathroom configuration, the storage. We use 60mm Colorbond roofing (rated for 10-plus years without maintenance) and Bondor insulated wall panels for thermal performance.

Second, no middlemen. We deal directly with the factory. No builder's margin, no project manager's cut, no marketing overhead.

Third, volume. When you're building 15 to 20 granny flats a year across the same suburbs, you negotiate material pricing that a one-off builder can't touch.

In Victoria, granny flats under 60 square metres don't require council planning approval — only a Building Permit 7. That saves $5,000 to $15,000 in planning fees and cuts the approval timeline from six months to six weeks. This is a regulatory advantage that many investors overlook. Planning permits involve neighbour notification, potential objections, council assessment, and sometimes VCAT proceedings. Building permits are a technical compliance exercise — if the structure meets the NCC standards, it gets approved. No neighbours. No objections. No politics.

The roofing is 60mm Colorbond, which we've tested across dozens of installations in Melbourne's southeast. After three years of exposure to coastal winds (Frankston) and heat extremes (Cranbourne), none of our roofs have required maintenance. The wall panels are Bondor insulated sandwich panels — R2.7 thermal rating, which keeps the interior comfortable year-round without excessive air conditioning costs. This matters because bills-inclusive rent is the norm for granny flat tenants, and your electricity costs directly impact your net yield.

The typical build timeline: paperwork takes one to two and a half months, construction takes about three months. From decision to tenant, you're looking at roughly five months. Our team handles everything — approval, transport, construction, compliance checks, then seamless handoff to our property management team for leasing.

Some of our clients fund the granny flat through refinancing after settlement. Buy the house, settle, wait six months, get a desktop valuation from CBA or Bankwest (which typically comes in higher than purchase price in a growing market), then refinance and use the released equity to fund the granny flat build. The bank's money pays for the construction, and the tenant's rent pays for the bank. You've added $100K-$200K in value and $370 a week in income without spending a cent of your own cash after the initial purchase 8.