Should Australia’s housing policy also be industrial policy?

This is Part One of a three-part Built Offsite series examining the relationship between housing delivery, industrial capability and sovereign manufacturing in Australia. Seven industry, policy, research and property voices consider whether housing investment should do more than deliver homes — and whether it can also strengthen productivity, manufacturing capability and the country’s capacity to keep building. (main image: NSW-based Green Timber Technology’s prefabricated timber wall panels being installed on site provide a practical example of the industrial capability at the centre of this discussion — linking factory-based production, repeatable systems and coordinated assembly with improved housing productivity. Image: Green Timber Technology.)

Australia’s housing challenge is usually expressed as a number: how many homes are needed, how quickly they can be built and what they will cost.

Associate Professor Ehsan Noroozinejad of Western Sydney University believes the discussion needs to extend beyond housing output alone.

“I believe housing policy should also be industrial policy, but the first test must remain simple: are we delivering good, affordable and well-located homes? Industrial policy should support that goal, not replace it,” he says.

Australia, Noroozinejad argues, will struggle to achieve the required scale while continuing to treat most homes as individual projects built predominantly on site.

“We will not meet that scale by treating every home as a one-off project built almost entirely on site. We need to keep improving planning and infrastructure, but we must also change how homes are designed, made and assembled.”

His research encompasses modern methods of construction, automation, robotics, modular systems and low-carbon housing. He sees prefabrication, panelisation, robotics and other manufacturing-led approaches as ways of moving more work into controlled environments, improving consistency and making better use of a constrained workforce.

But he does not see technology alone as the answer.

Noroozinejad has called for a national “MMC at Scale” program connecting approvals, finance, procurement and workforce development. At the centre of that argument is the influence exercised by government purchasing.

“Government procurement is not just a way to buy buildings. At scale, it shapes markets,” he says.

A steady program of social, affordable and key-worker housing can give manufacturers confidence to invest in factories, equipment, digital systems and people. Intermittent demand does the opposite.

“The worst approach is a short burst of orders followed by silence. A factory cannot survive on pilot projects and press releases.”

Noroozinejad’s position is broadly supported by the other contributors, although there is considerably less agreement that simply transferring construction from site to factory will produce cheaper housing.

Architect, land economist and property executive Jack Haber goes further in challenging that assumption.

“Housing policy is already industrial policy. The question is whether we design it consciously,” he says.

Haber points to Productivity Commission estimates showing that labour productivity in dwelling construction fell 12 per cent between 2001–02 and 2022–23 after allowing for quality changes, while productivity across the broader economy increased sharply over the same period.

Yet he cautions that industrialised construction changes rather than eliminates many of the risks involved in housing delivery.

“Industrialised construction changes the sequence and location of risk; it does not abolish it.”

Design and certification have to be resolved earlier. Factories require capital before conventional lenders may recognise value on site. Transport, cranes, storage, weather, tolerances, services, fire compliance and commissioning remain part of the process.

And even where construction costs fall, Haber argues, that saving does not necessarily find its way into the final selling price or rent. Land, infrastructure, finance, taxation, professional fees and development margins remain.

His test is therefore broader than whether a module or panel can be produced quickly.

“The real test is not whether one project was assembled faster. It is whether each round of housing investment makes Australia more capable of delivering the next.”

That distinction is also important to Noroozinejad.

Australia, he says, should not look at countries with mature industrialised construction industries, import the visible technology and assume the same results will follow.

“Do not import a model and expect it to work by itself. Build the full system around it. That means demand certainty, finance, standards, insurance, skills, research and trusted quality control.”

Nor does greater repetition need to mean monotonous housing.

Noroozinejad argues that standardisation should occur in platforms, components and interfaces while allowing homes to respond to climate, place, household requirements and community expectations. “Speed alone is not success,” he says.

The question of what Australia already has

For Adam Dawson, Engineering & Builder Solutions Manager ANZ at ITW Construction, there is another issue to consider before Australia commits capital to new manufacturing facilities.

“Australia already has surplus prefabrication capacity in its frame and truss sector,” he says.

Dawson argues that Australian housing’s high level of variability prevents manufacturers from extracting the full value of that existing capability.

“When everything is open to customisation it leads to every build being bespoke, allowing nothing to be manufactured ahead of time, and leaving factories under-utilised.”

He sees an opportunity to define smarter housing products with sufficient commonality for manufacturers, suppliers and trades to organise around them.

International experience, he says, contains plenty of examples of industrialised building businesses attracting substantial investment only to fail because they could not reach sufficient economies of scale.

“We have an opportunity to instead design in a way that fully utilises the capacity we have, rather than building something new that only competes with established suppliers.”

Structural engineer and DfMA specialist Simon McCarthy of Systemised Design Group reaches a similar conclusion from the design side.

“Manufactured housing will not work if every home is customised,” he says.

McCarthy suggests a model closer to volume housing, with catalogues of homes designed for manufacture by several suppliers rather than a single manufacturer. Such designs could also remain available to conventional builders.

The benefit, he argues, would be greater predictability in cost and program while providing manufacturers with the pipeline required to justify investment.

He also wants a more rigorous comparison between manufactured and conventional housing.

Success, McCarthy says, should track housing volumes, construction cost per square metre and defects across comparable traditional and offsite projects rather than assuming that industrialised construction is inherently more productive.

For Troy Eiken, chief executive of Modo Space, government procurement has a further role: creating the commercial confidence required for businesses to invest in the delivery systems surrounding manufacturing.

“Housing investment should not only deliver homes. It should also build the industrial capability required to produce more homes efficiently in the future,” he says.

Eiken says project-by-project procurement often creates competition without giving businesses enough certainty to invest in factories, automation, workforce training, digital engineering, quality systems and standardised products.

Longer pipelines can change that calculation.

But Eiken also warns against reducing the industrialised construction argument to factory production.

“This is different from treating modular construction as simply manufacturing a box in a factory.”

He sees the opportunity in connecting design, engineering, procurement, manufacturing, quality control, compliance, logistics and onsite delivery.

“The real opportunity is to create a controlled delivery system that provides certainty from design through to completion.”

Manufacturing does not necessarily mean closing the market

There is strong support among the contributors for retaining and developing Australian capability, but little appetite for treating industrial policy as a requirement that every product be manufactured domestically.

Jan Lienemann, managing director of Zen Haus Group, operates a model that illustrates that distinction. Zen Haus uses European-manufactured systems while Australian architects, engineers, certifiers, builders and trades undertake design, approvals, assembly and completion.

“A resilient housing sector is one that can draw on strong local manufacturing and proven international supply,” he says.

Lienemann, who grew up in Germany, points to the maturity of prefabricated housing there.

“Prefabricated homes are not treated as an experiment or a second-rate product. They are an established part of the housing market, supported by mature manufacturers, trusted certification and an industry that understands factory-based construction.”

In his own business, he says, “international manufacturing capacity becomes part of the local delivery chain rather than a replacement for it”.

He argues that the success of housing and industry policy should therefore not be reduced to a local-content percentage. Housing quality, delivery time, cost certainty, defects, energy performance, local employment, skills development and supply-chain resilience all matter.

Simon Croft, Chief Executive – Industry & Policy at the Housing Industry Association, also places the housing outcome ahead of the industrial objective.

“Housing policy should first and foremost be judged by its ability to deliver more homes, improve affordability and meet the needs of a growing population,” he says.

But Croft argues that Australia cannot simply increase labour inputs indefinitely. Productivity will have to improve.

“We need to embrace innovation, modern methods of construction, advanced building materials, digital engineering and new manufacturing processes that allow homes to be delivered faster, more efficiently and at lower cost.”

He also argues for a stronger domestic research base.

“We should be developing and exporting construction technologies, advanced manufacturing systems, digital compliance tools and innovative housing solutions rather than waiting to adopt ideas proven elsewhere.”

Croft adds an important qualification: productivity is not solely a technology issue. Research, manufacturing investment and innovation will achieve less if wider labour-market and industrial relations settings continue to constrain productivity.

Even so, he rejects the idea that industry development and affordability are necessarily competing goals.

“Affordability, productivity and industry development are not competing objectives — the most successful housing market can achieve all three.”

Across the seven contributions, there is no single prescription for the factory, technology or procurement model Australia should adopt.

There is, however, substantial agreement that housing investment can influence the productive capacity sitting behind the homes themselves.

Dawson sees under-used manufacturing capability that could benefit from more repeatable housing products. McCarthy wants designs and measurement systems that allow manufactured and conventional housing to be compared properly. Eiken argues for integrated delivery rather than isolated factory production. Lienemann sees domestic and international capability operating alongside one another. Croft places research, innovation and productivity at the centre of the discussion. Haber cautions that improvements inside the factory mean little if inefficiencies elsewhere in housing delivery simply absorb the gain.

For Noroozinejad, that is why the discussion needs to extend beyond manufacturing technology alone.

Public investment, he argues, should leave Australia with greater capability than it had before — stronger skills, more resilient supply chains, research capacity, repair capability, reusable design knowledge and manufacturing capacity.

Over the longer term, he says success should be judged across a broader set of measures: homes completed, delivery time, whole-of-life cost, defects, resident satisfaction, local value added, workforce growth, embodied carbon, waste, safety and export capacity.

“Housing policy should not only count houses,” Noroozinejad says.

“It should build the national ability to keep delivering them.”