How Much Should You Spend In Melbourne To Build A Granny Flat?

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The average price of building granny flats in Melbourne could range between $81,000 and $120,000, depending on the size of the structure.

While it’s possible to have one for as low as $10,000, take note that this isn’t ideal if you want to improve your home’s appearance. Homeowners should also consider an extension or room addition instead if they’re going to enhance the value of their properties at the same time. Melbourne also restricts occupancy in granny flats for immediate family members or dependents, so don’t expect to have one rented out.

Granny Flat Sizes

A 38-square-metre granny flat can cost at least $81,000, while 50- and 71-square-metre flats can cost $95,000 and $120,000, respectively. You could choose a kit and have it delivered to your home fully built. This will only require you to hire a contractor for laying the foundation, installing plumbing and electric systems.

However, builders usually include these installations in their quotes. It’s better to hire a company that specialises in these projects, especially if you want a custom flat. This is particularly true if you own an expensive house. Check the rules for granny flats in your locality to find out if you need to remove it at some point. Some municipalities in Melbourne may require you to do this once the occupant leaves or passes away.

Other Expenses

Cool wooden shed in allotments

Once you decide on a custom flat, some of the additional expenses include the installation of up to 10 power points and an external one. Fixtures for a bathroom/shower, kitchen, flooring and bedroom will also be part of the overall cost.

Custom cladding also affects the actual price. Standard cladding options are available, but there are other options at an extra price. Fibre cement cladding costs at least $2,800 for sealed and painted ones, while painted timber weatherboard cladding costs the same. Brick veneer is the most expensive among the three, which usually worth $8,400. Before you hire a contractor, it’s essential for married couples to know the legalities of ownership in case they plan to break up.

Funding A Project

If you have existing mortgage payments to your house, you would still need to apply for a new home loan to finance a granny flat construction. You could use the equity for an application, but remember that most lenders will require proof of sufficient income to pay off the new loan.

As early as now, you should already think of a design for your flat. Since Melbourne can be strict with the use of granny flats, homeowners could wait for up to a year before they receive a permit to start with a project. You could apply for a loan, begin concept planning and choose the right contractor while waiting for the approval.


Granny flats aren’t cheap, but it shouldn’t cost a fortune as well since there is a possibility that it could be taken down in the future. Limit your expenses by choosing a contractor that can understand your reason for building one.


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