PRD real estate sees a modular housing future

Declining affordability has shifted the reality of home ownership for many Australian households in recent times, yet alternative housing solutions may present an opportunity to address the dilemma.

Published last week, the PRD report entitled “Alternative solutions – Solving The Housing Supply Issue”, and authored by PRD Chief Economist, Dr Diaswati Mardiasmo, believes now is the time to discuss real, practical solutions to addressing the housing undersupply.

Modular housing is highlighted as one of five solutions.

At current, PRD outlines undersupply is being driven across Australia by a decline in building approvals, having fallen 21.8% since 2021 off the back of the end of HomeBuilder, alongside consecutive interest rate hikes, and building industry materials and labour shortages. 

The Housing Industry Association (HIA) reports that one in five home building contracts are being cancelled per month, which is expected to continue affecting the supply pipeline

“We know the root of our housing crisis is undersupply,” Dr Mardiasmo said. “The good news is we are not alone in this issue – there are many other countries who have or are currently experiencing this.”

Dr Mardiasmo believes Australia can draw upon solutions from other countries in alleviating housing undersupply, yet the challenge lies in implementing these within an Australian context. “Our government system is such that each Government level has autonomy in their housing strategy,” she said.

“Therefore, unfortunately there is not just one ‘perfect’ solution, but it is more likely that we will need to have a multi-faceted solution with a combination of 2 or 3 solutions.” 

Five potential housing supply solutions were outlined:

• Public Private Partnerships
• Modular Homes
• Build-to-Rent
• Asset Repurposing
• Community-Based Land Initiatives

In PRD’s assessment of modular homes, the report identifies that, “The appeal of modular homes compared to traditional construction home-build includes lower construction cost, increased sustainability, and faster turnaround time, while still providing the benefits of a traditional home, like ownership, security and comfort.”

The report cites two modular builders, Australian-based HomeLife Pods, and Estonian-based KODA homes, that share these common objectives:

• Targets individuals, couples, and families seeking affordable housing.
• Disability friendly configurations available, thus occupants can access relevant financial support.
• Suits those on social housing waitlists or students/young professionals seeking temporary rentals.
• Offers ease of transportability, flexibility of use, various configurations and sizes, and cost efficiency.
• Can be customised to suit the needs of the occupant or community imprint.

“Although modular homes have been utilised as an alternative to the traditional home-build for some time across the world, its potential as an alternative housing solution is currently not being implemented at its highest and best use. For this to occur, joint ventures between multiple governments, manufacturers, contractors, and community housing organisations are needed,” the report concludes.

See: https://www.prd.com.au/research-hub/article/solving-housing-supply-issue/