How Much to Build a Granny Flat in Melbourne?

October 17, 2023

Written by

Alana McNab

Modular home granny flat

A granny flat is a great way to build a smaller, more affordable home for family and guests. If you are planning to build in the Melbourne area, you may be considering a granny flat as a cost-effective solution to the rising price of construction and real estate. 

In this article, we explore how to build a granny flat in the Melbourne area, the estimated pricing, and key considerations to make.

What is a granny flat? 

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The term ‘granny flat’ is used to describe a dwelling on a property that is secondary to the main house. The name evolved because these units are commonly used to house elderly parents. In Victoria and some other Australian states, granny flats are also called Dependent Person Units (DPUs). 

Common inhabitants of DPUs include grandparents, elderly parents, or a relative with a disability. However, people often use granny flats to generate a second income, host guests, or house teenage children. In these cases, the building is legally considered a self-contained unit instead. 

While they are often used interchangeably, granny flats, units, and studios are not the same thing in legal terms:

A unit is a self-contained secondary dwelling that must include a kitchen sink, food preparation area, toilet, basin, and shower or bath. In some cases, they may also require a car parking area and backyard.

A studio is a separate building that doesn’t have the facilities of a dwelling. Studios are generally used as hobby spaces or work-from-home offices. Most councils require that a studio has either a bathroom or a kitchen, not both. 

Restrictions on granny flats

Granny flat restrictions Australia

The National Construction Code and local state laws may require that a granny flat is located on a certain property size, with a private entrance, self-containment, and easy removal. Always make sure to check your local council’s guidelines for any restrictions.

In Victoria, the person living in the granny flat must have a dependency on the person(s) in the existing home. This may mean a family member with a disability, an elderly family member who requires assisted living, or even a single parent on a pension. 

Other considerations include any easements, title covenants, and council restrictions. 

3 steps to build a granny flat 

1. Checking your certificate of title

Firstly, check your property for any restrictions or covenants that would prevent you from building a granny flat. 

2. Consult your local council

The laws and approval process will vary between local councils so it pays to approach them early on. Ask if you need a planning permit or a building permit for your granny flat and find out any building limitations that may apply. Don’t worry – when building an Anchor Home we can assist in the application for both permits if necessary. 

3. Choose a reputable builder

The most important decision to make is which building company you want to work with. Choose a company that specialises in granny flats and smaller designs as they will be familiar with the most effective methods, as well as the relevant rules. At Anchor Homes we have built and delivered many granny flat projects across Victoria and Southern New South Wales.  

In addition to their area of expertise, look for a builder that ensures high-quality workmanship. Look for companies that offer displays or photos of their previous projects so that you can see first-hand how well they deliver on their designs. For example, see our projects page to see what our modular homes look like on-site.

Always do your research and take your time to decide. This granny flat will be yours or your loved one’s home so it needs to be built to a high standard. 

At Anchor Homes, you can tell us about your design ideas and we’ll handle the rest of the process for you. Since our homes are modular, we can build them in our specialised factory, speeding up the process and minimising disruption to your property.

Granny flat prices in Australia

Granny flat prices AustraliaAt Anchor Homes, the delivery of the home is included in the base price. Therefore, the total project cost is dependent upon the location where you intend to construct your home. Additionally, it's imperative to take into account your preferences for floorplans and design selections, as these elements are significant contributors to the overall project cost.

We recommend contacting our team in order to initiate a discussion regarding your project concepts. By doing so, we can tailor an exclusive project estimate specifically for your granny flat.

To help you further understand our pricing, we've provided a few examples below. These are the base prices for homes in our 2-bedroom range, which vary based on location and design.

*Prices as of October 2023. Please note that our base prices are postcode-specific. This is because the cost of the delivery of the home is included in the base price. 


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The Suburban is a popular 2-bedroom home with a single skillion façade and an optional verandah. The open-plan living maximises space while the kitchen is discretely situated along the rear wall with plenty of storage. Both bedrooms include built-in robes, highlight windows, and access to the verandah through sliding doors.

If the Suburban house was delivered to Cranbourne, our base price would be $247,200*. 


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The Beaumaris design is compact and low-maintenance. Both bedrooms include built-in robes and the master comes with an optional private deck. The open-plan living is bright and airy, with an optional decking accessed through sliding doors. 

If the Beaumaris design was delivered to Lilydale, the base price would be $244,210*.

Walkerville project

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Granny flat Melbourne

Our Walkerville Project on the Gippsland coast is a great example of what can be done with a compact modular design. This Beaumaris design features stylish upgrades and light-filled living, providing an effortless environment for the owners. 


House design

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The Queenscliff design is a slightly larger version of the Suburban layout, with an additional ensuite and walk-in robe. The stylish cubehaus façade allows lofty 2700mm ceilings throughout, creating a spacious feel. The open-plan living includes a straight-line kitchen, double sliding doors, and an optional front deck. 

If the Queenscliff was delivered to Rye, the base price would be $267,850*. 

Over to you

If you're interested in building a granny flat, feel free to browse our designs or download our pricing. If you have any questions about building a granny flat or need assistance with your project, don't hesitate to get in touch with our team

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