There are many benefits to expanding prefabricated and modular construction in Australia, particularly for onsite conditions and schedules and to remedy the acute housing shortage. However, the sector needs rapid scale-up as it still accounts for less than 5 per cent of all buildings.
Boosting prefabrication capacity and the modular industry could help in expanding Australia’s domestic manufacturing capabilities.
In mid-2022, prefabrication accounted for only 3 to 5 percent of Australian buildings, highlighting a significant gap in adoption compared to global trends. In stark contrast, Sweden has adopted prefabrication to such an extent that it comprises over 80 per cent of construction.
The Netherlands follows with a robust 20 per cent, whileGermany and Japan show notable but lesser adoption rates of 9per cent and between 12 and 16 per cent, respectively.
The Australian market was worth an estimated US$10billion in 2025, according to market research firm MordorIntelligence, which projected a compound annual growth rate of nearly 5 per cent leading the market to reach US$13.71billion by 2030.
In a meeting held in March of last year, federal and state building ministers agreed to collaborate on reducing red tape and promoting the growth of the prefabricated and modular construction industry.
Reiterating the national target to construct 1.2 million new homes over the next five years, the ministers committed to improving regulatory certainty for the sector, tasking theAustralian Building Codes Board (ABCB) to clarify existing regulatory pathways through a new guidance paper and undertake a comprehensive review of regulation improvements.
Ed Husic, Minister for Industry and Science at the time, said prefab and modular housing could build more quality homes quickly.
Husic added: “We need to pull every lever to help the use ofadvanced manufacturing to support the rollout of these homes.”
In October, the Australian Building Codes Board (ABCB),which oversees the National Construction Code (NCC), released a handbook focused on prefabricated, modular, and off-site construction.
This resource aims to enhance understanding and improve application of existing building standards and regulations related to prefab and modular buildings.
It also responds to government and industry requests for guidance on achieving NCC compliance in buildings that use modern methods of construction, such as prefabrication.
Research published in the Journal of Building Engineering noted that the COVID pandemic had underscored the role construction plays in sustaining the Australian economy, and the far-reaching impacts when works are limited due to restrictions on travel, transport and workforce availability, subsequently affecting the supply of materials and workers.
A survey of 310 construction professionals was conducted to assess industry perspectives on prefabrication. The findings revealed three major benefits: significantly reduced construction time, enhanced quality control, and minimised onsite noise and disruption.
The researchers said: “These survey results also highlighted that the production and manufacturing of prefabricated construction were not affected significantly by the COVID pandemic.
“Furthermore, a significant amount of traditional, residential and commercial construction projects were replaced by prefabricated construction during [the] pandemic, suggesting a future growth in prefabricated construction in Australia.”
While prefabricated construction is a known sustainable solution that mitigates labour and material demand, the researchers noted it was less preferred over traditional construction in Australia, primarily due to a lack of knowledge surrounding its benefits, limitations, design, and construction methods.
Composite materials expert Tuan Ngo, Professor at the University of Melbourne’s Department of Infrastructure Engineering, said prefabrication was the solution to increasing demand not being met by supply in the traditional construction sector.
He explained that the new generation of prefab buildings not only had lighter and stronger structural components, but also offered opportunities to have high-performing thermal and acoustic walls, floors and ceilings by combining durable ands ustainable materials into systems such as sandwich panels.
He added: “These days, things can be done much more affordably and efficiently in the factory, but at the moment a lot of onsite work is taking place in Australia, and that’s why I think quality and safety has been a problem – you can reduce and minimise those risks with prefabrication.”
Prof Ngo currently leads the International ResearchNetwork for Decarbonising the Building Industry andAdvanced Protective Technologies of Engineering StructuresResearch Group, the bid to establish the Australian ResearchCouncil (ARC) Training Centre for Advanced Manufacturing of Prefabricated Housing, the research portfolio University of Melbourne’s Building 4.0 Collaborative Research Centre (CRC),and is a Board Director for peak offsite modular industry body PrefabAUS.
He said: “We are seeing huge demand in the building industry for new techniques that will allow for the development of faster and cheaper construction, [and] the only way to reduce costs is to reduce the cost of manufacturing.
“The future is going to be prefabricated in terms of infrastructure, so that is why we’re doing a lot of work at the moment to develop our capability in this area.”
The ARC Training Centre for Advanced Manufacturing andPrefabricated Housing is establishing a collaborative training pipeline between industry and universities.
This initiative seeks to provide affordable, high-quality housing by implementing innovative practices and streamlining supply chains. It aims to stimulate local employment growth andboost exports of prefabricated products and services.
The four integrated research programs at Building 4.0 CRC,which Prof Ngo previously led, aim to capture new opportunitiesacross the entire value chain in cooperation with governmentacademia and industry, creating an efficient, connected, andcustomer-centric future.
Mathew Aitchison, Professor of Architecture at MonashUniversity and Chief Executive Officer of Building 4.0 CRC, stated that the concept of modular or prefabricated housing is not new. Australia has intermittently embraced prefabrication since the mid-19th century.
Prof Aitchison explained: “It crops up cyclically, because it solves particular needs at particular times – but somehow, the knowledge and memory fall away.“What happened in the past is one of the barriers [to wider adoption], because if you don’t have knowledge and memory of what happened last time, you are probably more inclined to make some of the same mistakes that were previously made.
“We need to start capturing more data to understand thispart of the [construction sector] better.
“We don’t know [what] constitutes the current industry –there are guesses out there, which are between 3 and 5 per cent of buildings in Australia.”
He also noted the growing interest in modular housing from governments, industry bodies, and the public, but cautioned against viewing it as a silver bullet or panacea for the housing crisis.
Prof Aitchison said it was a helpful tool and could play a role, but was by no means a ‘get out of jail free’ card.
He added: “Governments are right to explore it [and] it should be part of the mix – it’s very appropriate for certain uses, perhaps less for others.”
