Australia’s growing reliance on modular housing and prefabricated elements from Asia

Australia’s trade relationship with Asia is expanding beyond the usual sectors of tourism, resources, and education. A new player is emerging in the form of modular housing and building materials, marking a significant shift in import patterns. While this trade may not match the billions in traditional sectors, the import of prefabricated building elements from Asia has been steadily increasing, driven by a pressing need to address housing affordability in Australia. Chinese modular exports dominate this growing market, followed by those from Vietnam and Malaysia.

“There’s no doubt that the electorate’s mind is focused on cost of living issues with housing at its root,” said Matthew Kandelaars, Property Council of Australia’s group executive on policy and advocacy. “More and more people are talking about prefab in an Australian context, given the significant national housing supply deficit that we’re facing.”

In the past five years, Australia has imported nearly A$500 million worth of prefabricated building elements and modules from China alone, with imports from Malaysia and Vietnam each totalling around A$34 million. Last year, Chinese goods accounted for roughly 70 per cent of Australia’s prefabricated imports, overshadowing the 3 per cent shares from Malaysia and Vietnam.

This surge in Asian imports coincides with the Australian government’s ambitious target of building 1.2 million new homes between 2024 and 2029, as part of a national housing accord with state counterparts. National statistics show just over 900,000 dwellings were constructed in the previous five-year period.

Kandelaars highlighted the complexities facing the housing system, including rising taxes, high construction and land costs, and cumbersome development approval processes. “The dream of a quarter-acre block that has been hard-wired into the Australian psyche for so long is changing,” he said. “The planning system, however, hasn’t shifted as quickly.”

“As Australia’s domestic sector for prefab housing proves itself and scales up, the natural position would be that we would look to import what we can,” Kandelaars noted.

The journey to this point has been fraught with challenges. Foreign buyers, particularly from China, have often been blamed for increasing housing demand and prices. However, research shows that foreign-buyer demand is crucial for new housing development, ultimately benefiting Australian residents.

Australian developers and entrepreneurs are now exploring options to source materials, primarily from China and Vietnam, and invest in modular development ventures. James Laurenceson, economist and director of the Australia-China Relations Institute, sees modular housing as an opportunity for increased trade between Australia and China.

“Australia struggles to meet its housing needs domestically, and no other country can supply prefab materials at a quality and price point like China can,” Laurenceson said. “Robust trade with China in the form of prefab materials will be a key factor that improves housing affordability in the coming years.”

Source: South China Morning Post