The federal government has pledged $54 million towards an innovative method of building to accelerate home construction nationwide.
This funding boost supports prefab and modular construction, which has long been touted as a potential big contributor to correcting the nation’s housing woes.
Prefabricated homes are dwellings that are primarily constructed offsite before transported to location and assembled onsite.
This type of home is seen as a quick way to build new homes and address Australia's growing need for housing supply.
But getting them off the ground has faced challenges such as slow planning approvals and tricky financing options for buyers.
CommBank recently announced a partnership with prefabAUS, the peak body for Australia’s offsite construction industry, to combat some of the roadblocks by speeding up the process for those looking to finance a prefab home.
Now, the federal government has backed the method with funding announced ahead of the 2025 federal budget.
Prefabricated homes are constructed offsite and then assembled at their location. Picture: Getty
The government plans to invest $49.3 million to help states and territories develop local programs that support prefabricated and modular home building.
An extra $4.7 million will also go towards a voluntary national certification process for offsite construction to streamline approvals.
According to the government, prefab and modular homes can reportedly be built in half the time of traditional homes.
“We’re tackling the housing crisis head-on by building more homes, using new technologies, and making it easier for Australians to buy them. This budget lifts our commitments in housing to $33 billion, and there’s more to come,” minister for housing Clare O’Neil said.
How will funding impact the sector?
Industry bodies have welcomed the funding announcement, with the Property Council of Australia noting the potential of prefab homes in creating affordable housing supply.
“Prefabricated and modular homes can be built to consistently high standards, faster and with strong sustainability and safety credentials,” Property Council chief executive Mike Zorbas said.
“To achieve the scale of supply Australia needs, the sector needs a consistent demand pipeline and a supportive regulatory environment.
“This funding will lift the sustainable pipeline of work, giving innovative public and private investors further confidence to expand production.”
The federal government announced $54 million towards prefabricated and modular home construction. Picture: Getty
Housing Industry Association said the funding would support greater innovation across the sector, but stressed more reforms are needed to meet National Housing Accord targets.
“HIA’s Budget submission highlighted the urgent need for planning system reform and greater investment in key last mile infrastructure. Delays in development assessment and access to build ready land continue to be one of the biggest barriers to housing supply,” HIA managing director Jocelyn Martin said.
“Workforce shortages are also holding the industry back. More targeted investment in training and attracting skilled workers into residential construction is essential to lifting output.”
Ms Martin urged further collaboration between industry and government to streamline housing regulation and reduce red tape, which continues to impact home building.
The Urban Development Institute of Australia shared similar sentiments and called on the government to commit $5 billion to enable infrastructure to expedite projects that assist new housing developments.
“It is absolutely critical we unlock housing because unless enabling and other infrastructure is funded and developed and planning approval timeframes significantly reduced, none of the housing can be built,” UDIA national president Col Dutton said.
Recent data from UDIA shows a lack of infrastructure is impacting new home construction in 33% of residential areas in Australia’s biggest cities
“$5bn would make a significant difference to jump-start the delivery of homes that are currently being held back through lack of state funding for infrastructure,” Mr Dutton said.
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