Granny flats have surged in popularity across Melbourne and Victoria as a smart way to increase property value, generate rental income, and accommodate changing family needs. With housing affordability a growing concern and lifestyle preferences evolving, building a granny flat is becoming a go-to strategy for new homeowners and investors alike.

As we look ahead to 2025, it’s vital to choose the right suburb for your granny flat project to maximise returns and lifestyle benefits. Location plays a crucial role in determining how much value and rental demand your granny flat can generate. Innovista Group specialises in guiding clients through site selection and custom design to create properties that perform well in Melbourne’s competitive market.

In this comprehensive guide, we explore the best suburbs for granny flats in Victoria, focusing on factors like growth potential, infrastructure, rental demand, and council regulations. We also highlight why Werribee is a standout choice for building granny flats and how to leverage expert support for your development.

Why Granny Flats Are A Top Investment Choice In Melbourne For 2025

Melbourne’s property market continues to evolve with increasing demand for flexible living solutions. Granny flats, also known as secondary dwellings or dual occupancy homes, offer numerous advantages:

• Affordability & Value Addition: Granny flats allow homeowners to add significant value to their property without purchasing additional land. This is particularly appealing in Melbourne’s high-demand market, where land is at a premium.
• Rental Income Potential: Separate granny flats can be rented out independently, often yielding higher combined rental income than a single dwelling. This attracts investors seeking steady cash flow and improved return on investment.
• Multigenerational Living: Granny flats provide privacy and independence for elderly parents, young adults, or carers while keeping families connected. This trend is growing strongly among Melbourne homeowners.
  
• Streamlined Council Regulations: Victoria’s planning policies have been updated to make granny flat approvals simpler, reducing red tape and encouraging more developments.

By building a granny flat in the right suburb, you can maximise these benefits while tapping into growing market demand.

What Makes A Suburb Ideal For Building Granny Flats?

Choosing the best suburb involves several key considerations:

• Growth & Infrastructure: Suburbs with expanding infrastructure, schools, transport, and amenities tend to attract more renters and buyers.
• Land Size & Zoning: Availability of suitable block sizes and favourable zoning rules is essential for dual occupancy and granny flat approvals.
• Affordability: More affordable suburbs allow investors to enter the market with lower capital while offering growth potential.
• Rental Demand: Areas with high rental demand ensure your granny flat remains occupied, providing steady income.
• Council Support: Proactive councils with clear granny flat guidelines simplify the development process and reduce risks.
  

With these factors in mind, let’s explore the top suburbs for granny flat projects in Melbourne and Victoria.

Top 5 Suburbs To Build A Granny Flat In Victoria In 2025

1. Werribee

Werribee, located in Melbourne’s outer west, has become one of the most promising suburbs for granny flat investment. It offers a unique blend of affordability, lifestyle, and growth.

• Infrastructure Growth: Werribee is benefiting from major upgrades, including transport links (rail and road), schools, and shopping centres, making it attractive for families and renters.
• Affordable Land: Compared to inner-city suburbs, Werribee offers larger blocks at reasonable prices, perfect for granny flat developments.
• High Rental Demand: The suburb has a strong rental market driven by young families and workers seeking affordable housing close to employment hubs.
• Council Incentives: Werribee’s local council is supportive of granny flat projects and provides clear guidelines that help reduce development risk.
  

Many investors who choose to build granny flat Werribee enjoy healthy rental yields and property appreciation as the suburb continues to grow.

2. Craigieburn

Craigieburn has experienced rapid urban development and population growth over recent years. It is a popular choice for families and first-home buyers, making it ideal for granny flat projects.

• Strong Community Growth: New housing estates with modern infrastructure attract long-term residents and renters.
• Accessibility: Good public transport links and road networks connect Craigieburn to Melbourne CBD and surrounding areas.
• Suitability for Granny Flats: Many properties have the land size and zoning allowances needed for secondary dwellings.
• Increasing Property Values: Steady price growth improves investment returns over time.

Craigieburn’s expanding community and affordability make it an excellent choice for those looking to build granny flats.

3. Sunbury

Offering a semi-rural feel with easy city access, Sunbury is attractive for buyers wanting space and lifestyle without sacrificing convenience.

• Growing Population: Infrastructure projects and urban expansion have increased demand for housing in Sunbury.
• Land Availability: Larger blocks and flexible zoning make granny flat developments feasible.
• Lifestyle Appeal: Proximity to parks, schools, and community facilities enhances appeal to families and tenants.
• Council Support: The Sunbury council has clear policies encouraging granny flat builds, easing approval processes.

Sunbury’s balance of lifestyle and growth prospects continues to draw both homeowners and investors.

4. Pakenham

As one of Melbourne’s fastest-growing suburbs, Pakenham boasts new housing estates, shopping centres, and schools, attracting diverse residents.

• Expanding Infrastructure: New roads, public transport extensions, and amenities increase the suburb’s accessibility and livability.
• Large Block Sizes: Many new developments include generous land parcels suitable for granny flats or dual occupancy.
  
• Investment Opportunity: Pakenham offers competitive pricing and strong rental demand.
• Proactive Council: The council actively supports granny flat and dual occupancy development.
  

Pakenham’s dynamic growth ensures long-term value and strong rental yields for granny flat investors.

5. Frankston & Frankston North

Frankston’s coastal location and urban amenities make it a desirable suburb for renters and homeowners alike.

• Beachside Lifestyle: Attractive to tenants looking for affordable coastal living near Melbourne.
• Established Infrastructure: Schools, shopping, and transport connections are well developed.
• Rental Demand: Strong demand for affordable rentals, including granny flats.
• Council Efficiency: Streamlined approval processes for granny flats encourage timely developments.

Frankston offers a unique blend of lifestyle and investment appeal, especially for granny flat projects targeting tenants who value coastal access.

How Innovista Group Can Help With Site Selection and Design

Selecting the right site and designing your granny flat to maximise space, privacy, and compliance are essential for success. Innovista Group provides comprehensive support, including:

• Site Assessments: Detailed analysis of your property’s zoning, size, and council requirements.
• Custom Design Solutions: Tailored granny flat designs that complement your existing home and land features.
• Council Approvals: Assistance navigating Melbourne and Victoria’s planning regulations for a smoother build process.
• Turnkey Construction: End-to-end project management ensuring quality, timelines, and budget adherence.
  

With Innovista Group’s expertise, you can confidently build granny flats that not only meet regulations but also maximise market appeal and investment returns.

Final Thoughts

Choosing the best suburbs for granny flats in Victoria is a strategic decision that significantly impacts your investment’s success. Areas like Werribee, Craigieburn, Sunbury, Pakenham, and Frankston offer strong growth potential, infrastructure development, and council support, making them ideal for 2025 granny flat projects.

Whether you’re a new homeowner seeking extra space or an investor aiming for high rental yields, partnering with Innovista Group for site selection and custom design ensures your granny flat project is compliant, efficient, and tailored for maximum return.

Ready to build your granny flat in one of Melbourne’s top suburbs? Contact Innovista Group today to start your journey with expert guidance and premium solutions.

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