Granny flat: traditional build vs prefab home

If you’re thinking about adding a granny flat to your property, you’re not alone. Across Australia, people are building granny flats for family members, rental income, or simply to make better use of their land.

Once that decision is made, the next question is usually how to build it. Should you go for a traditional (on-site) build or go for a prefabricated home i.e. a home that is (partially) manufactured off-site and placed on your property?

Check out my article on prefab homes vs. traditional builds for more information on the pros and cons for each.

While both options are common, they lead to very different experiences in terms of time, cost, and overall stress.

Building an on-site granny flat vs. buying a prefab granny flat in Australia

A traditional granny flat is built entirely on your property. A builder coordinates trades, materials are delivered to site, and construction happens step by step, much like a standard house build. This approach gives you a lot of flexibility. You can customise the design, adjust layouts, and in some cases make changes during the build. The downside is that timelines are often longer and less predictable. Weather delays, trade availability, and variations can all slow things down and push costs higher than expected.

Prefab granny flats work differently. Most of the home is built off-site in a factory, then delivered to your land and installed. Some prefab homes arrive as modules, others as panels, and some are almost complete when they arrive. Because the build happens in a controlled environment, the process is usually faster and more consistent. Pricing is often clearer upfront and there is far less disruption on site. The main trade-off is flexibility. Once production starts, changes are harder to make, and your design options depend on what the manufacturer offers.

Regulations and approvals for granny flats in Australia

When it comes to approvals, many people assume prefab homes follow different rules, but that’s not the case. From a planning perspective, traditional and prefab granny flats are assessed under the same regulations. The same size limits, setbacks, height controls, and zoning rules apply. The main thing prefab has going for itself is that it's generally easier to get a CDC for a prefab build than a traditional build. However, this again depends on the State that you're based in.

Cost is another big factor. Traditional builds often start with a base price, but the final cost can increase due to material price changes, or variations during construction. With prefab, pricing is usually locked in earlier because much of the work is done in the factory. You still need to allow for site works, connections, approvals, and delivery, but overall there tends to be more certainty around the final number. For many people, that predictability makes budgeting much easier.

Timeframes are where prefab really stands out. A traditional granny flat can take six months to get approved and several more months to build, and delays are common. Prefab builds often run approvals and construction at the same time. While your council paperwork is being processed, the home is already being built in the factory. Once approved, installation on site can take days or weeks rather than months, which means you can move in or start renting much sooner.

Pros and cons of prefab for granny flats in Australia

Choosing between a traditional build and a prefab granny flat comes down to what matters most to you. If you want a highly custom design and don’t mind a longer, more variable process, a traditional build can make sense. If you value speed, clearer pricing, and a more streamlined experience, prefab is often the better fit.

When it comes to a second dwelling e.g. a grannyflat, that's where prefab really shines because it's simply cheaper, faster and less of a hassle than working with a traditional builder.

What matters most, regardless of the build method, is understanding what you can actually do on your land before you commit. Zoning, setbacks, access, bushfire overlays, and services all play a role in what’s possible. Once you have clarity on those basics, the decision between traditional and prefab becomes much easier and far less risky.

Below is a simple comparison of how the two options stack up.