Australia pushes prefab housing mainstream with $489m in federal funding

HouGarden Australia, 28 October — This is an Australian federal policy development and does not directly affect the New Zealand property market.

Assistant Minister for Productivity, Competition, Charities and Treasury Andrew Leigh was scheduled to outline the government's ambitions at an Australian Sustainable Built Environment Council event at Parliament House on 29 October, calling for modular and prefabricated construction to become a mainstream option by 2036.

The scale of the productivity problem is stark. Australia's Productivity Commission has found the country now builds roughly half as many homes per construction worker as it did 30 years ago. Significant prefabrication currently accounts for just three to five per cent of new Australian housing, Mr Leigh said.

"Much of our construction industry still operates in ways that would have been recognisable to builders a century ago," Mr Leigh said.

Prefabrication allows walls, bathrooms and entire housing modules to be manufactured in controlled factory conditions before being transported to sites for assembly. The approach reduces exposure to weather delays and allows different stages of work to proceed simultaneously.

A report by the Committee for Economic Development of Australia (CEDA) and consulting firm Urbis estimates that modern construction methods can reduce building times by 20 to 50 per cent and cut costs by about 20 per cent at scale. These are modelled estimates from the report, not government commitments.

The government is directing $120 million through the National Productivity Fund to help states and territories remove regulatory barriers that currently place modern construction methods at a disadvantage relative to conventional building. This is the first of six separate funding allocations.

A further $4 million is being invested in a nationally consistent set of definitions and a voluntary manufacturer certification scheme. Full commencement of that scheme is scheduled for mid-2028 — it has not yet taken effect. Housing Minister Clare O'Neil is leading the work, which is intended to give manufacturers a clearer path to demonstrating compliance with the National Construction Code.

The government is also supporting standardisation through a $39.3 million Kit of Parts initiative, which will make Australian-designed building components freely available so architects and builders can combine standard elements in different configurations. "Think of it as applying some of the logic of manufacturing to housing, while leaving plenty of room for architectural creativity," Mr Leigh said.

A $135 million investment in Construction Centres of Excellence is aimed at helping workers develop skills in prefabrication and advanced construction technologies.

Under the Housing Australia Future Fund, $71 million is supporting the construction of 117 crisis and transitional homes using modern construction methods, including homes for women and children escaping family violence. "When construction time falls, people who urgently need secure accommodation can get it sooner," Mr Leigh said.

On the manufacturing side, the National Reconstruction Fund Corporation announced in August an investment of up to $120 million in Built Living, a joint venture between Built and Wesfarmers. That funding will support a housing manufacturing facility in Neerabup, Western Australia, designed to produce components for more than 2,000 apartments a year. The company has stated an ambition to build apartments up to 50 per cent faster and 20 per cent cheaper than conventional construction.

Mr Leigh pointed to existing demonstrations of the approach in Australia. In 2014, a nine-storey Melbourne apartment building called One9, containing 34 homes, was assembled in five days using 36 prefabricated modules craned into place. A 20-storey student accommodation tower currently under construction in Sydney's Macquarie Park is being built using volumetric modular technology and is expected to become Australia's tallest volumetric modular building when complete. The development will contain 528 student rooms; 12 levels had been assembled by September, approximately 13 weeks after the first modules arrived on site.

Mr Leigh said prefabrication could also help address housing shortages in regional and remote communities, where labour shortages, transport costs and weather regularly delay conventional construction.

Industry body prefabAUS has set a separate aspiration of prefabrication reaching 30 per cent of construction by 2033. The government's own target of mainstream adoption by 2036 is a different benchmark. Mr Leigh also pointed to Sweden, where the great majority of detached homes already incorporate prefabricated construction.

Private companies are also moving into the sector. Chandolin Construction, in partnership with Cuby Technologies, is building three pilot homes for a Bathurst not-for-profit that supports displaced teenagers, with completion expected before the end of this year.

Chandolin Construction director Sarah Dimitrievski said the technology transformed housing from a labour-intensive process into a digitally controlled manufacturing system. The process uses portable, containerised Mobile Micro-Factories to manufacture home components, with QR codes and artificial intelligence co-ordinating production, packing and delivery to building sites.

"It drastically reduces the time, cost and labour required to build high-quality homes, delivering units in 30 to 60 days at a cost that is often one third below traditional methods," Ms Dimitrievski said. "This unlocks the ability to scale housing supply rapidly, even in regions with tight labour markets or high material costs, making it an ideal solution for Australia's housing shortage."

Mr Leigh said the ultimate measure of success would not be construction statistics. "They'll be measured in young people able to afford a home. In families spending a smaller share of their incomes on housing. In vulnerable Australians getting secure accommodation sooner," he said.