Modern methods of construction key to solving the housing crisis

The Committee for Economic Development of Australia (CEDA) found modern methods of construction (MMC) can cut construction costs by 20%, representing savings of $14 million for a typical Sydney apartment building.

The Built Different: Modern Methods of Construction report, compiled in partnership with Urbis, found MMC could cut construction times by 20% to 50% and reduce costs by around 20% when implemented at scale.

MMC includes prefabrication, off-site manufacturing, modular or volumetric building, 3D printing, robotics, and AI integration processes.

It comes as Australia is projecting a national shortfall of between 200,000 and 300,000 dwellings against the National Housing Accord target of 1.2 million new homes by 2029, the report said.

Average construction times have risen 40% since the pandemic and a new standalone home now takes 9.2 months to build, while a new apartment building takes close to two-and-a-half years.

Commenting, CEDA head of research Danika Adams said more buildings are required to meet Australia's housing needs, and a more efficient approach must take place to reach the target.

"The National Housing Accord target of 1.2 million new dwellings by 2029 is ambitious, and current progress is falling short," Adams said.

"Modular construction is currently used for less than 5% of new Australian homes. Given housing supply is constrained by how slow and expensive it has become to build, modern methods of construction offer a practical way to improve that.

"Traditional construction is not keeping up. These methods already exist, they work, and the challenge now is scaling."

The report found productivity has since deteriorated, with dwellings built per construction worker falling 40% since the 1970s.

Urbis partner Clinton Ostwald acknowledged the shortfall and stated better alignment will be critical to revitalising productivity in construction.

"We know this is a system-wide challenge, which means it also needs a system-wide response," Ostwald said.

"To scale modern methods of construction, we need better alignment across planning, regulation, procurement, finance and the supply chain so industry has the confidence to invest and deliver at scale."

Further, Adams said the report identifies barriers to implementation including fragmented regulation, inconsistent standards, financial constraints and workforce capability gaps.

"This is not a silver bullet, but with coordinated policy and united support from industry and government it is a tangible, scalable and evidence-based way to build more homes, faster and at lower cost," Adams said.

CEDA and Urbis encouraged governments to treat MMC as a central tool for unlocking housing supply at a time of critical national need.