According to The Australian Financial Review, the Kashimo Studios units designed to fit council regulations in NSW and ACT are intended as a premium version of the granny flats that offer a cost-effective way to boost housing capacity and density. Bathroom fittings aside - which can cost as much as a buyer wants to spend on them - Totenhofer's Japanese hinoki (cypress) and sugi (cedar) dwellings cost between 10 per cent and 20 per cent more per square metre than their conventional equivalent.
"They all start around $40,000 to $45,000 for a 20 square metre one," he says. "I can get one, if you choose more simple products, for about $48,000."
And it is a growing market. In NSW, where the Affordable Rental Housing – State Environmental Planning Policy that allows property owners to rent their secondary dwellings came into place in 2009, demand for tax depreciation schedules - used to calculate tax deductions - for granny flats rose 24 per cent in the year to June 2017, says quantity surveyor and tax consultancy BMT Tax Depreciation. In Queensland, where the regulations vary according to local councils, demand jumped 41 per cent.
The growth is likely a response by investors wanting to find affordable alternatives, given soaring median house and unit prices, says BMT chief executive Bradley Beer.
"This has led many investors to consider creative means to boost their portfolio's yield, such as the addition of a granny flat," Beer says.
These could be rented at a rate achieving around a 15 per cent yield annually, he says.
Not every state permits granny flats, however. While WA, Tasmania, ACT and NT allow it, they cannot be used as income-producing secondary dwellings in Victoria or SA.
Totenhofer says his units, with components cut to order from secondary forests grown around Kashimo village in central Japan's Gifu prefecture, can be assembled on site in five or six days with no need to clear soil or lay a slab.
But he also says the wooden structures - which meet Australian fire and other building materials standards - are designed to encourage people to live in smaller dwellings.
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