Sydney property buyers are increasingly searching for one standout feature — and it’s not just a pool.
In 2025, “granny flat” became the second-most searched term on Domain in Sydney, outranked only by “pool”. The rise in popularity highlights a major shift in how homeowners and investors are thinking about property: flexibility, income potential, and multi-generational living.
Why Granny Flats Are in High Demand
Also known as secondary dwellings, granny flats are self-contained homes built on the same lot as a primary residence. In NSW, they can be up to 60 square metres, typically accommodating:
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Two bedrooms
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One bathroom
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Open-plan kitchen and dining
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Optional additions like decks, verandahs, carports, or garages
But it’s not just about size — it’s about versatility.
1. Multi-Generational Living
With rising living costs and ageing parents, many families are choosing to stay closer together. Some homeowners are downsizing into a granny flat while allowing their children and grandchildren to live in the main house. Others build secondary dwellings for newlyweds or extended family members to help them get ahead.
This setup provides independence while keeping family nearby — a major lifestyle advantage in Sydney.
2. Strong Investment Potential
Savvy investors are also capitalising on the trend.
Instead of purchasing a new property, many are investing approximately $200,000–$260,000 to build a granny flat and create a second rental income stream.
With Sydney’s housing undersupply and strong rental demand, a secondary dwelling can:
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Increase overall rental yield
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Improve property value
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Provide long-term ROI
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Offer flexibility for future resale
Recent lending data shows renovation loans have increased significantly, with many borrowers using funds to build granny flats rather than upgrading to a new property.
3. Work-From-Home & Lifestyle Use
Not every granny flat is for tenants.
Buyers are also using them as:
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Home offices
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Creative studios
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Guest accommodation
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Home gyms or wellness spaces
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Private retreats for long-stay visitors
In premium suburbs like Mona Vale and Freshwater, high-end homes featuring well-designed granny flats are drawing strong interest — not just for income potential, but for lifestyle flexibility.
In fact, some buyers have expressed that the secondary dwelling is the main attraction of the property.
Does It Make Financial Sense?
For many owners, the numbers stack up.
Instead of spending six figures on a home extension that may not significantly increase value, building a separate dwelling can:
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Generate independent rental income
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Appeal to a wider buyer pool
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Create long-term capital growth opportunities
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Reduce negative gearing pressure
When designed with privacy in mind — separate access, thoughtful layout, and independent utilities — both dwellings can comfortably coexist and perform well in the rental market.
The Bigger Picture: Innovation in a Tight Market
Sydney’s property market remains competitive and undersupplied. Rather than stretching to buy additional properties, many homeowners are maximising what they already own.
Granny flats represent:
✔ Smart asset optimisation
✔ Housing flexibility
✔ Intergenerational support
✔ Improved cash flow
✔ Future-proofed property strategy
It’s no surprise that buyers are actively searching for them.
Final Thoughts
Whether for family, rental income, lifestyle use, or future resale value, granny flats are becoming one of Sydney’s most desirable property features.
And as market conditions continue to evolve, adaptable housing solutions like secondary dwellings may only grow in popularity.
