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Modular Homes - The Future of Australia's Housing Market?

Modular Homes - The Future of Australia's Housing Market?

19 Jul 08:00 by

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Australia’s looming housing crisis has caused governments and businesses alike to look to alternative solutions to manage the growing prices and decreasing accessibility of the housing market. One possible solution that’s proved effective in other countries is modular homes.

What are Modular Homes?

Modular homes - also known as prefabricated homes, prefabs, or off-site construction - refers to those homes that are constructed in modules offsite, and then assembled and attached on site. This type of construction has been widely used internationally, with Sweden and Japan showing success with modular construction in the residential sector. So why is it so rarely seen in Australia? There’s a belief that countries with severe winter climates, such as Sweden, had little choice but to embrace modular construction as the extreme weather conditions limited the time for outdoor work, whereas Australia has no such need. Additionally, the average Australian consumer has viewed modular construction as low quality with lesser longevity than the more traditional on-site construction, which has contributed to a slow uptake in Australia.

The Housing Crisis

Earlier last month, Australian household debt saw the downgrade of all four major banks, and eight other institutions, by global ratings agency Moody’s. This comes just one month after rival agency S&P Global downgraded almost all Australian banks due to uncertainty surrounding Australia’s housing market. With high levels of debt, rapid credit expansion, stagnation of wages, and increasing amounts of high risk debt, these major Credit Agencies are concerned about a potential economic downturn in Australia’s future. On the micro level, this could be ruinous for individual households if house values decrease while they continue to pay high mortgage rates.  

How will Modular Homes help the housing crisis?

It’s clear that Australia’s housing crisis needs to be addressed before disaster strikes, which begs the question – how could modular housing help? While there are multiple factors that contribute to housing prices, such as land size, location, etc. a big part is the construction cost of housing itself. Modular homes present an opportunity for home-buyers to save up to 25%. By constructing the pieces in their own facilities, construction companies have greater control over the day to day trades, reducing the need for high cost executives such as project managers and operations managers. Overall construction time of these homes is reduced from 12 months down to as low as 12 weeks, are installed in a single day, and finished in 2-3 weeks  – reducing project time and thus costs. Not to mention the fact that architectural consulting is often included in the overall price of the houses built.

While it’s not the complete solution to Australia’s housing crisis, it’s certainly part of the wider solution, and has already proven successful in several other countries that have faced similar housing affordability issues. Modular construction may very well be the way forward for residential construction at the very least, and could prove to not only be more affordable, but more time effective and efficient too.