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New proposal aims to provide lenders with greater confidence during the offsite construction phase.
The Tasmanian Government has announced plans to introduce a Modular Housing Finance Guarantee, a scheme designed to address one of the most persistent obstacles facing the modular housing sector: access to construction finance. (main image: Tasmanian modular builder Valley Workshop installing hyper-insulated timber elements.)
Premier Jeremy Rockliff said the initiative would provide government-backed guarantees for loans during the offsite construction phase, a period when many lenders are reluctant to provide finance because the home has not yet been installed on land and cannot be used as traditional mortgage security.
Under the proposal, the government guarantee would apply while a home is being manufactured in a factory and progressively reduce as construction advances. The guarantee would cease once the dwelling is installed and becomes standard mortgage security.
“The biggest obstacle to modular housing isn’t the build, it’s access to finance,” Rockliff said.
The government argues the measure could help accelerate housing delivery, reduce upfront costs and improve access to home ownership, particularly for first-home buyers.
Finance recognised as a key modular housing constraint
Speaking at a business lunch hosted by the Committee for Economic Development of Australia (CEDA) on 3 June, Rockliff said Tasmania’s housing challenge was fundamentally a supply issue and that faster construction methods would play an important role in addressing shortages.
“Tasmania does not have a housing demand problem. We have a housing supply problem,” he said.
“Embracing faster, lower-cost construction methods is not optional. It is essential to boosting housing supply, easing pressure on costs and ensuring more Tasmanians can access secure and affordable housing.”
The announcement comes as governments around Australia increasingly examine industrialised construction methods as a way to improve housing delivery. In May, the Federal Government announced a $39.3 million commitment to trial an open-source System 600 prefabricated housing system nationally.
The 2026 National Housing Supply and Affordability Council report found Australia’s housing system has failed to keep pace with demand for decades, while a recent CEDA report noted build times have increased by 40 per cent since the COVID-19 pandemic and construction costs have risen by 88 per cent since 2014–15.
Master Builders Tasmania Chief Executive Officer Jenna Cairney said financing arrangements had not kept pace with advances in modular construction, although further details would be required around lender participation, builder accreditation and risk management measures.
Legislation to establish the scheme is expected to be introduced during Tasmania’s August parliamentary sitting. The government has not yet released details on potential costs, guarantee limits or housing delivery targets associated with the initiative.
The announcement follows ongoing scrutiny of housing delivery across Tasmania. A recent review of the state’s housing program questioned progress towards the government’s target of delivering 10,000 homes by 2032 and highlighted uncertainty around how housing completions are measured. The government has reported 4,854 homes completed to date, including social housing, supported accommodation, land lots and homes acquired through its shared equity program.
