What our analysis shows
Analysis by Granny Flat Numbers, data as of 23 October 2026
- A standard 60 m² two-bedroom flat comes to $220,000 turnkey in Sydney ($193,500–$246,500) and $187,500 in regional NSW. Construction is about 82% of the bill; the rest is site, connections, approval and the council contribution.
- Granny flats rent for less than apartments. In 81,668 NSW bonds lodged July–September 2026, a one-bedroom detached dwelling in Greater Sydney rented for a median $550 a week, 24% below a one-bedroom flat ($719). Two bedrooms: $650 against $837.
- Using apartment rents to justify the build moves the Sydney payback from 10.7 to 8.3 years. Builder guides we reviewed quote Sydney two-bedroom granny flat rents of up to $780 a week; the bond median is $650.
- Outside Sydney the discount mostly disappears: 2% on the Central Coast and 4% in the rest of the state for one bedroom. Newcastle is the best payback in NSW in our model, at 9.3 years, because the regional build costs less and two-bedroom detached rents are high.
Fastest payback in NSW, 60 m² two-bedroom flat
- Newcastle9.3 years
- Wollongong9.9 years
- Greater Sydney10.7 years
- Central Coast10.9 years
- Hills and north-west10.9 years
- Rest of NSW11.5 years
- Western Sydney12.5 years
- South-west Sydney14.0 years
After agent fees, insurance, maintenance and tax at 30%, no loan. Rent: median of new bonds for detached 2-bedroom dwellings, July–September 2026.
Where the money goes
Our Sydney reference flat, line by line. The calculator above uses the same figures, so you can change one thing and see the effect.
| Line | Sydney | Share |
|---|---|---|
| Construction | $180,000 | 82% |
| Site preparation (flat, easy access) | $12,000 | 5% |
| Sewer, water, power and stormwater connections | $10,000 | 5% |
| Design, engineering and BASIX/energy report | $8,000 | 4% |
| Approval: Complying development certificate (CDC) | $4,500 | 2% |
| Council s7.11 contribution (typical) | $5,500 | 3% |
| Total | $220,000 | 100% |
Granny flat builders in Sydney often advertise "from $150,000". That figure usually covers construction and the CDC only. The site work, sewer connection and council contribution, about $36k on a straightforward block, are quoted separately or as provisional sums. Ask for a fixed price on each before you compare builders.
| Size | Budget | Standard | Premium | Standard, regional |
|---|---|---|---|---|
| Studio, 35 m² | $133,500 | $154,500 | $189,000 | $134,000 |
| 1 bed, 45 m² | $153,500 | $179,000 | $221,000 | $154,000 |
| 2 bed, 60 m² | $187,000 | $220,000 | $274,000 | $187,500 |
Council contributions
Most Sydney councils charge a development contribution on a new secondary dwelling under a section 7.11 plan (a set amount per dwelling) or a section 7.12 plan (a percentage of the build cost, usually 1%). The amount depends on the council, the precinct and the number of bedrooms:
- Canterbury-Bankstown, March 2026 quarter: $5,646 for a studio or one bedroom, $9,042 for two bedrooms and $12,252 for three, outside the town centres.
- Blacktown: $3,985 for one bedroom and $5,535 for two.
- A 1% section 7.12 levy on our reference build would be about $1,800.
Contributions per dwelling are capped at $20,000 in established areas. The calculator includes a typical $5,500; check your council's plan, because one extra bedroom can add $3,000–4,000.
The rent you can actually get
NSW Fair Trading publishes every new rental bond with its postcode, dwelling type and bedroom count. We took all 81,668 bonds lodged in July, August and September 2026 and compared detached one- and two-bedroom dwellings, the category granny flats fall into, with flats and units of the same size.
| Area | 1-bed detached | 1-bed flat | Gap | 2-bed detached | 2-bed flat |
|---|---|---|---|---|---|
| Greater Sydney (1166 bonds) | $550 | $719 | 24% | $650 | $837 |
| Western Sydney (263 bonds) | $450 | $580 | 22% | $560 | $640 |
| South-west Sydney (82 bonds) | $440 | $420 | -5% | $500 | $520 |
| Hills and north-west (37 bonds) | $480 | $650 | 26% | $640 | $750 |
| Newcastle (92 bonds) | $400 | $450 | 11% | $640 | $610 |
| Wollongong (41 bonds) | $460 | $480 | 4% | $600 | $600 |
| Central Coast (106 bonds) | $420 | $430 | 2% | $550 | $575 |
| Rest of NSW (661 bonds) | $380 | $395 | 4% | $520 | $500 |
Not every detached one-bedroom dwelling is a granny flat, but most are: one-bedroom houses are rare in Sydney. The pattern fits what tenants say. A flat in a backyard shares a driveway and garden with the owner, has no lift lobby or pool, and is often further from a station than an apartment block. Price your rent from this table or from your agent's appraisal of comparable granny flats, not from apartment listings.
Bond data: NSW Government rental bond data. Medians of new bonds; groups with fewer than 30 bonds are left out.
Payback by area
| Area | 1-bed rent | 2-bed rent | 60 m² build | Net yield | Payback |
|---|---|---|---|---|---|
| Newcastle | $400 | $640 | $187,500 | 14.4% | 9.3 yrs |
| Wollongong | $460 | $600 | $187,500 | 13.4% | 9.9 yrs |
| Greater Sydney | $550 | $650 | $220,000 | 12.4% | 10.7 yrs |
| Central Coast | $420 | $550 | $187,500 | 12.2% | 10.9 yrs |
| Hills and north-west | $480 | $640 | $220,000 | 12.2% | 10.9 yrs |
| Rest of NSW | $380 | $520 | $187,500 | 11.5% | 11.5 yrs |
| Western Sydney | $450 | $560 | $220,000 | 10.5% | 12.5 yrs |
| South-west Sydney | $440 | $500 | $220,000 | 9.3% | 14.0 yrs |
Payback here is the number of years of after-tax rent it takes to recover the build cost. It does not count any rise in the value of your property, which is uncertain for a flat that cannot be sold separately; see does a granny flat add value.
CDC or DA
A complying development certificate from a private certifier is the normal route: our model allows $4,500 and certifiers typically decide in 10–20 days. A development application to council costs about $7,500 more in fees and reports and usually takes two to four months. You need a DA when the lot is under 450 m², narrower than 12 m at the building line, a heritage item or in a flood-control or high bushfire-risk area. The rules checker tells you which applies.
Costs only NSW has
- Home Building Compensation Fund insurance. The builder must take it out on residential work over $20,000; it is usually built into the price.
- BASIX certificate. Required for every new dwelling, it sets minimum water and energy targets. On a granny flat it usually means a rainwater tank or efficient fixtures and a heat-pump or solar hot water system.
- Sydney Water building plan approval. Any flat built near a sewer main needs it; building over the main can require concrete encasement or a diversion. Get the sewer service diagram before you design.
This week's worked example
Week of 19 October 2026. A new example, rule and owner report every Monday.
A 40 m² one-bedroom flat with a standard finish on a steep block, services 30 m from the house, in Wollongong: our model puts it at $183,500 turnkey ($161,500–$205,500), or $4,590 per m². At the area's median 1-bedroom bond rent of $460 a week it would return 10.2% net and pay back in 12.8 years after tax.
Rule check: Section 50 of the NSW Housing SEPP applies the secondary dwelling rules only where the local plan permits a dwelling house on the land, which is why some R4 high-density lots cannot take a granny flat.
From an owner (NSW, 2023): A buyer walked away from a Liverpool house whose granny flat had been built from an old carport and workshop on the boundary without approval.
Questions people ask
How much does a granny flat cost in Sydney?
About $220,000 for a standard 60 m² two-bedroom flat on a flat block, all-in. Budget finishes bring it to $187,000; premium to $274,000. A steep block adds about $33k.
How much rent does a granny flat get in Sydney?
The median for a new bond on a one-bedroom detached dwelling in Greater Sydney was $550 a week in July–September 2026, and $650 for two bedrooms. Western Sydney: $450 and $560.
What is the maximum size of a granny flat in NSW?
60 m² of floor area under the Housing SEPP, unless your council's LEP allows a larger secondary dwelling. The lot must be at least 450 m² for the fast-track CDC route.
Do I pay a council contribution for a granny flat in NSW?
Usually yes, under the council's section 7.11 or 7.12 plan. In March 2026 Canterbury-Bankstown charged $9,042 for a two-bedroom secondary dwelling outside its centres and Blacktown $5,535. Contributions are capped at $20,000 per dwelling in established areas.