Adding a granny flat to your Melbourne property can be a smart move — whether you need extra space for family, want to earn rental income, or create a private studio. But before you start planning, it’s crucial to understand the granny flat cost in Melbourne, including design, construction, and permit expenses.
This guide covers everything you need to know — from secondary dwelling costs to budgeting tips that help you make informed decisions before building.
What Is a Granny Flat?
A granny flat (also called a secondary dwelling or studio) is a small, self-contained living unit built on the same property as your main home.
They’re typically between 40m² to 80m² and can serve as:
- Accommodation for parents or adult children
- A home office or studio space
- A guest suite or short-term rental
In Melbourne, granny flats are becoming increasingly popular due to housing affordability and flexible living trends.
Average Granny Flat Cost in Melbourne
The average cost to build a granny flat in Melbourne in 2025 ranges from $120,000 to $250,000, depending on size, design, and inclusions.
Here’s a general price overview:
- Basic one-bedroom unit: $120,000 – $150,000
- Two-bedroom granny flat: $160,000 – $220,000
- Custom or high-end design: $230,000 – $300,000+
If you’re converting an existing garage or structure, your studio costs may start as low as $80,000 — but expect additional expenses for plumbing, insulation, and approvals.
Factors Affecting Granny Flat Pricing
1. Size and Layout
Larger granny flats naturally cost more to build. A compact 40m² studio is significantly cheaper than an 80m² two-bedroom unit.
2. Design and Materials
A simple rectangular floor plan with standard finishes will be more affordable than a fully customised build featuring premium materials, vaulted ceilings, or integrated decks.
3. Site Conditions
Uneven land, difficult access, or poor soil conditions can add thousands to your construction costs. Always include site preparation in your detached dwelling budget.
4. Services and Connections
Installing new plumbing, electrical, and sewer connections is often one of the largest hidden costs. Expect to budget $10,000–$25,000 for utilities, depending on distance from the main dwelling.
5. Permits and Regulations
Melbourne councils require planning and building permits for most granny flats. Permit fees typically range between $1,000–$3,000, depending on your location and property zoning.
6. Builder or Modular Option
Modular or prefabricated granny flats are cheaper and faster to install than custom builds. However, a custom builder gives you more design flexibility.
Cost Breakdown by Type of Granny Flat
Attached Granny Flat
An attached secondary dwelling shares one or more walls with your main home. It’s cost-effective and suitable for smaller blocks, averaging $110,000–$160,000.
Detached Granny Flat
A detached granny flat offers full privacy, ideal for rental or family use. These range between $150,000–$250,000, depending on design and finishes.
Garage Conversion
If you already have a garage or shed, converting it into a livable space costs around $80,000–$130,000, depending on structure quality and upgrades needed.
How to Plan Your Granny Flat Budget
To create a practical granny flat budget, follow these steps:
- Define your purpose – Will it be for family, guests, or rental income?
- Get multiple quotes from licensed Melbourne builders.
- Add 10–15% contingency for unforeseen costs.
- Consider utilities and landscaping in your total budget.
- Ask for a detailed cost breakdown to avoid surprises.
Working with experienced granny flat specialists ensures transparency and compliance with Victorian building codes.
Is Building a Granny Flat Worth It in Melbourne?
Yes — in most cases, a granny flat can add 20–30% to your property’s value and generate $350–$500 weekly rent, depending on the suburb.
They also offer long-term flexibility: perfect for multigenerational living, guest accommodation, or a home office that pays for itself.
Tips to Reduce Granny Flat Expenses
- Choose a standard floor plan instead of a custom design.
- Simplify roofing and foundation structures.
- Use cost-effective materials with durable finishes.
- Reuse existing utility connections where possible.
- Compare multiple builder quotes before deciding.
Even small savings on materials or design can reduce your overall granny flat pricing by thousands.
Common Mistakes to Avoid
- Starting without a council permit or approval.
- Choosing a builder without experience in secondary dwellings.
- Underestimating connection and service costs.
- Failing to plan for privacy or access for tenants.
Always check local planning regulations before committing to your design.
FAQs: Granny Flat Cost Melbourne
1. What is the minimum cost to build a granny flat in Melbourne?
The most basic designs start around $120,000, but costs can increase with size, finishes, and site complexity.
2. Can I rent out my granny flat in Melbourne?
Yes, in most council areas — but check zoning and permit rules before renting it out.
3. How long does it take to build a granny flat?
Most builds take 12–20 weeks, depending on weather and permit approvals.
4. Do I need planning permission for a granny flat?
Yes, most Melbourne councils require planning and building permits for secondary dwellings.
5. Can I build a two-storey granny flat?
It’s possible, though less common. Expect significantly higher construction costs for a two-level structure.
Conclusion
Building a granny flat in Melbourne is one of the smartest ways to increase property value and living flexibility. Whether you’re housing loved ones or generating rental income, understanding the secondary dwelling costs upfront helps you stay within your detached dwelling budget and avoid surprises.
Ready to start? Contact an experienced Melbourne granny flat builder for a customised price estimate and start designing your ideal secondary dwelling today.
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