Investors are waiting on the sidelines for further information about the changes to Granny Flat legislation in Western Australia, according to a property investment consultancy in the area.
After WA’s planning minister John Day made the announcement in February about plans to open up more granny flat opportunities if they were re-elected, and their subsequent re-election, interest has started to grow.
Momentum Wealth’s Damian Collins told Smart Property Investment that it has definitely been sparking interest, but it has been on the drawing board for “quite some time”.
Currently, some Western Australian shires do allow granny flats to be rented to non-related parties.
Pointing to a potential ‘blended yield’, that is combining the original dwelling with the granny flat, of around eight per cent, the returns are significant, he said.
“We’re starting to see interest in it, some people are starting to land bank,” said Mr Collins. He explains that interstate investors, such as those from NSW, are aware of the opportunities.
However, he says that the situation is actually more favourable than that in NSW – where many Granny Flats are restrained to areas such as Sydney’s West. In Perth, “the beauty is that you’ll be able to get into areas seven or eight kilometres from the city.”
He points to houses available for $400,000 to $500,000 within this distance.
For those concerned about the excess supply or the effect that ‘carving backyards up’ may have on the area, he explained that it’s still low-rise development.
His expectations are that in most of the areas development will be slow as it’s “mainly people living in their own houses and they don’t want to build [granny flats] … and for many investors it might not be financially viable or the right time.”
He expects that on a $100,000 granny flat, a weekly rental return of $300 to $350 should be achievable.