Building Australia’s housing future with prefabrication

Australia’s construction sector is facing a crossroads: labour shortages, rising costs and soaring demand for new homes. To meet the challenge, builders are turning to prefabrication (prefab) supported by advanced manufacturing techniques like robotics and automation, a shift that could redefine the industry, says Damien Crough, Executive Chairman, prefabAUS.

“These changes have been happening for a while, but the speed of change has really accelerated,” he says. However, the construction industry faces headwinds such as a declining skill and knowledge base. Workforce tilt away from traditional trade has opened up an opportunity for the prefab sector to deliver the next generation of construction jobs, more attractive to a younger cohort.

“We're not able to attract young people into the industry,” Crough notes, adding that the average age of a tradesperson in Australia is between 50 and 55 years old.

On top of this is Australia’s housing affordability crisis and the fact that the construction industry is already at capacity. The need to deliver new homes to meet national and state targets is adding further pressure on already constrained resource.

"There are huge infrastructure projects taking up a lot of the labour force, which means there is less available for the housing market. It’s a bit of a perfect storm.”
— Damien Crough, Executive Chairman, prefabAUS

What are the benefits of prefabrication? 

Crough believes advanced manufacturing techniques that deploy prefabrication will play an enabling role in the future success of the construction sector. Prefabrication involves building parts of a building, or the entire building, in a factory and then transporting it to the site, rather than building everything on site. Modern techniques such as the use of digital twins enable a building to be fully designed digitally before it is physically built.

Another significant benefit of prefabrication is the speed at which projects can be completed.

“Master builders released data last year that found it takes 55 weeks to build a conventional house in the suburbs in Australia right now,” says Crough. “By contrast, most prefab manufacturers are handing over a set of keys in about 16 weeks.”

“Master builders released data last year that found it takes 55 weeks to build a conventional house in the suburbs in Australia right now. By contrast, most prefab manufacturers are handing over a set of keys in about 16 weeks.”
— Damien Crough, Executive Chairman, prefabAUS

Another benefit is the enhanced quality of a building constructed in a controlled environment. “It boosts quality assurance and quality control processes,” says Crough.

He explains that when something is built in a factory, it has what is known as a ‘tighter tolerance’, meaning the deviation from the specification is lower.

“This results in fewer issues with air changes. Buildings that leak air and need to be heated and cooled use a lot more energy. Prefab therefore typically performs better than a conventional building and uses less energy.”

With more scale and volume, prefabricated buildings could help to meet the need for more educational and aged care facilities.

Australian companies are turning to prefabrication and modular construction to drive efficiency across a range of commercial projects, like hospital projects, but there is significant scope to dial up investment in this approach. The standardised nature of prefab construction can reduce costs attached to major development projects by simplifying assembly through consistent sizing and layout.

There are a few early adopters among listed companies already. SHAPE Australia CEO Peter Matrix-Evans said in the company’s FY25 results update, “From facilities maintenance and multi-million-dollar fitouts to modular construction and new builds, SHAPE brings unmatched attention to detail, relationship focus, and industry-leading safety practices to every project”. Modularisation is also reshaping the data centre market: DXN Limited reported that its Perth facility is producing prefabricated data centre modules, designed for rapid deployment and reduced disruption to client operations.

Fleetwood Limited, long established in the modular accommodation space, reaffirmed in its half-year results that education, health and social infrastructure projects remain a focus for its prefabricated solutions.

Prefabricated construction has the potential to accelerate build times while giving manufacturers greater oversight of safety and quality standards, and its repeatable methods are increasingly being applied across medical facilities, transport infrastructure, public service centres and accommodation such as hotels and student housing. Because more of the work takes place in controlled factory environments, manufacturers can apply consistent processes and reduce exposure to certain risks.

How is CommBank supporting prefab in Australia?

CommBank is supporting Australia’s prefab sector by offering construction loans for prefab homes which enable customers to access progress payments during the off-site factory build stage. Buyers using a CommBank Assessed Manufacturer can get up to 80% of their total build contract price financed before the home is fixed to the land, and those using builders can access up to 60%.

“Previously, if somebody had to fully fund the project themselves, it added to the cost of the project, because there's a cost to working capital and they have to pass that on, which then adds to the price of the project for the consumer,” says Crough.

CommBank is also sponsoring the development of a standardised prefab construction contract by PrefabAUS, with the aim of providing greater clarity and confidence for both the consumer and the financier.

“The support from CommBank is going to create significant opportunities,” says Crough.

“It is allowing our prefab manufacturers to grow their businesses, because it provides a working line of capital. The situation before actually devalued their businesses and made it hard for them to grow and take on more work, and thereby provide more housing to the market.”

"The support from CommBank is going to create significant opportunities. It is allowing our prefab manufacturers to grow their businesses, because it provides a working line of capital. The previous situation devalued their businesses and made it harder for them to grow and take on more work, thereby preventing them from providing more housing to the market.” 
— Damien Crough, Executive Chairman at industry group prefabAUS

A future path for construction laid out

Regulators and governments also recognise the contribution the prefab housing sector can make to solving the housing shortage. They are working to make approval and certification simpler.

“At the federal level, Treasurer Jim Chalmers has recognised the opportunity the prefab industry could bring to the housing market,” says Crough. “He has announced significant funding for the states to streamline their planning and he's provided funding to the Australian Building Codes Board to develop a voluntary certification scheme for manufacturers.”

“It's a recognition that what we do is different. The whole planning regulation and finance industry has been designed and built around building things on site, so these models need to change. We’ve been stuck in a planning and regulatory process, which is very slow, but we're hopefully going to see more streamlined processes around both.”

“The whole planning regulation and finance industry has been designed and built around building things on site, so these models need to change.”
— Damien Crough, Executive Chairman at industry group prefabAUS

How is the industry challenging misconceptions about prefab?

A certain stigma exists around the prefab projects of the past. It is still commonly associated with low-quality temporary buildings that sprang up in the post-war period. The modern reality is very different, with high-quality and energy-efficient homes.

More work remains to be done in changing perceptions, says Crough.

“We're addressing [the stigma] through our national awards program that recognises the best buildings in Australia across residential construction, healthcare, education and infrastructure. These Smart Building Industry Awards have been a great opportunity to showcase the high-quality, architecturally-designed buildings coming from our prefab builders in Australia.”

Crough is excited to reveal that next year there will also be a television series called Epic Builds: The 90 Day Challenge, hosted by media personality Adam Spencer.

“It is a consumer education piece that will also drive demand for prefab homes,” says Crough.