Reforms from the Victorian Government are opening doors to increase secondary dwelling construction (e.g. granny flats). New research from the e61 Institute projects the impact of these reforms by analysing a similar policy implemented in Sydney in 2009.

Secondary dwellings surged after the Sydney reform, contributing 1.5% of Sydney’s total housing supply growth and was 6.1% of detached housing growth over the past 15 years. Construction was greatest in areas with more unoccupied land space and larger households, located primarily in Sydney’s western suburbs – including in Bankstown, Fairfield, and Merrylands.

Applied to Melbourne, this experience indicates that the reforms may boost housing supply by over half a percent. We project that takeup may be highest in some outer suburbs (such as Tullamarine and Casey) and some inner suburbs (like Essendon and Coburg).