AUSTRALIA’S housing market is facing one of its biggest challenges in decades, with affordability at record lows and supply struggling to meet demand.
In response, the Federal Government has committed $54 million in the 2025 budget to boost prefabricated and modular home construction, a move aimed at accelerating housing development and reducing costs.
The funding will see $49.3 million allocated to states and territories to support local prefab and modular housing programs, while an additional $4.7 million will go toward creating a national certification process for offsite construction.
By streamlining approvals, the Government hopes to remove some of the red tape slowing down housing projects.
Minister for Housing Clare O’Neil said, “We’ve got a big goal to build 1.2 million new homes in five years, and to reach that we need to build homes in new ways – using methods like prefab we can build homes up to 50 per cent faster.”
Treasurer Jim Chalmers in his Budget speech, “This is about building more homes, more quickly,” “It supports our work to cut red tape and reduce financial barriers to more efficient construction methods.”
Industry Minister Ed Husic reinforced the benefits of prefabricated housing, pointing out that factory-built homes could be completed in half the time of traditional builds. Faster construction times mean quicker access to housing and potentially lower costs for buyers.
While this investment is a step forward, infrastructure remains a critical issue. The Urban Development Institute of Australia is urging the Government to go further, calling for a $5 billion commitment to fund infrastructure that would support large-scale housing projects.
“It is absolutely critical we unlock housing because unless enabling and other infrastructure is funded and developed and planning approval timeframes significantly reduced, none of the housing can be built,” said UDIA National President Col Dutton.
According to UDIA data, infrastructure constraints are already affecting one-third of residential areas in Australia’s major cities, limiting the ability to deliver new homes where they are needed most.
For the real estate industry, these investments represent a shift toward modern construction solutions that could reshape the market. Prefabricated homes are not only faster to build but could help ease affordability pressures by reducing labour and material costs.
This initiative aligns with other government efforts to impRove housing accessibility, including:
- The Housing Australia Future Fund, aimed at increasing social and affordable housing.
- The Government will boost the Help to Buy scheme by increasing income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents.
- Restrictions on foreign investors purchasing existing homes to free up housing stock for Australians.
