Considering how expensive it is to own a home in major cities like Sydney and Melbourne why aren't more people buying prefab homes? Or they don't know about it?
Why Isn't Prefabricated/Modular Buildings Taking off? Housing Crisis
gamesmaster on 19/02/2023 - 12:43
Last edited 19/02/2023 - 13:31 by 1 other user
Last edited 19/02/2023 - 13:31 by 1 other user
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stack em up like jenga
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That's just an apartment building with extra steps.
It’s about 14 per floor for 2.4m ceilings.
Sounds like it's an apartment building with less steps.
like in Ready Player One?
The primary cost is the land, not the building.
And that's why people don't buy cheap little houses. They spend as much as they can on them. Because the additional cost of a big elaborate house over a simple cheap one doesn't increase their mortgage and loan repayments much. And its not the land they live in, its the house. So they get considerably more "value" for only a small increase in cost.
Land prices appreciate, while building prices depreciate, unless it is a high-quality custom-built architect-designed building (which cost more than your volume built sticks-and-paper shacks).
If you're like most people, you want an affordable home/investment property, and can only justify a minimum spent on the total house and land cost.
With land prices sky high now, there's less room for the build cost, and now builders are changing a lot more than in the past — most now range from $3,000-6,000 per square metre, the ABS last year pegged average build prices in Australia at $473,000 and Philip Lowe's inflationary bubble has pushed that even further out of reach of millions of potential homeowners.
Now houses can cost upwards of 300k
In Sydney $300K doesn't even renovate a bathroom.
Renovations can easily cost more than a new build.
@Zephyrus: Why is this the case? Is it just more effort / time to work around an existing structure, with all its quirks and issues, than to push out a cookie cutter building?
@poppingtags: Not an expert, but pretty much + the cost to remove everything you need removed. That could be a lot, removing tiles or concrete is a PIA. Putting them in is pretty easy.
@poppingtags: Order of operations is easier for new build.
Reno's you have to stabilise the existing structure, remove just enough but not too much, can't use heavy machinery so it's all by hand, space is tighter and existing services are in the way, can't drive the work vehicle through the garden…
Worse, sometimes owners are still living in the dwelling. Tradies now need to waste time to clean up each day and owner poking their nose in means can't hide lazy workmanship to cover it up later with silicone or paint.
The average cost of a single story 3-bedroom build these days, including allowances for one new fence the length of your property / doing a driveway over an existing footpath / additional costs for getting utility mains fitted & connected is around $275K currently.
You can pick 1 (maybe two) option from the following to fit in that budget:
- Solar panels on the roof (without a battery)
- 2.7m ceilings instead of the shitty standard 2.4m
- Mid Tier quality ducted A/C system
- Internal wall insulation of any real basic standard to dampen noise between rooms
- 900mm kitchen cupboards to go with 900mm sized gas oven / stove-top & a marble kitchen counter/island
- Small Alfresco area outside back door
- Security roller shutters
- Front of the house completely rendered
- A front fence with an electric gate
I'd love to know where you pulled this data from. After most site extras you wouldn't really walk away with change from $350,000. If this is land only in a new development area it may be possible.
Of course for that price you're getting something that will barely outlast the warranty period…
Really? Most recent build I was involved in, regional NSW was 4 bed, 2 bath, 2 garage brick and tile at $580k from a project builder. That was on the cheap side, it's more like $19k / builders square now.
I very much doubt you can finish a house for $27k today. My guess would be closer to $400k.
We are building a 46sq home with medium-quality upgrades and it's cost us $900k. The same house would've probably cost $550k 3 years ago and $400k 10 years ago.
@WhatWouldBiggieDo: This is about right. A friend has just completed a new build, 5BR, 3Ba, 2 storey ~$1m
Location: Sydney north shore
$275K? did you accidentally time travel from 2010?
Not really, if you are building a duplex these days, unless you are building bargain basement stuff, it's about the same 25km out of Sydney city, that's about half way through the metro area. Most of the examples I see now are quite premium builds becuase the land is so expensive, it's hard to over capitalise.
If you go further out the ratio gets more in favour of builds costing more. If you go further into town it gets it gets more in favour of land costing more, but then there are many many more units where the build cost far exceeds the land cost
Because at least two thirds of the cost of new homes is in the value of the land.
Because most would prefer to rent a legit house that impresses their friends that own a prefab that doesn't impress their friends.
100% correct.
Many years ago, I happily rented an old and dated house for long time. One time my friend asked me to housesit for her and she said "then you'll get to stay in a nice house for a change".
I said, "are you saying my house isn't nice?"Was fun watching her try to talk her way out of that one lol.
I was thinking yeah, have fun paying an extra $100 bucks a week for your nicer, smaller house that you will never own. This was in like 2014.
No wonder they had to pay a buttonne of LMI when they eventually did buy a house.It is nice staying in a nice house tho. The house I'm living in is like the house Springfield built Flanders in Hurricane Teddy.
They did their didly best ok
Is it ding dong diddly crap?
Damn… 9 years ago and it seems like you're still salty over that 1 line
Found the "friend".
I just laugh about it and pity her.
But yeah, that one line was just the tip of the iceberg.
She always acted like she was better than me because she grew up in a wealthy suburb closer to the city and I grew up in Franga, but what she didn't seem to realise was her living in that wealthy suburb was her parents achievement, not hers.
Now she lives about 1 1/2 hours from her parents in a crap suburb, because she couldn't get a big enough loan to move where she wanted to live.
Still makes me laugh to think about it.@Some Human: (profanity) it man people hating on you for staying petty but I'm glad that "friend" is eating shit
@Papa Huggies: Thanks mate.
Like I said, that comment was just the tip of the iceberg in a long list of things she said that made me feel like I was being bullied / attempted to be made to feel inferior by someone with an inferiority complex.Needless to say, she not been my friend for a very long time.
Sometimes the most random passing comments like that are the most memorable decades later
True friends can be honest when describing the shitbox you live in.
This is why people don't buy prefab, wouldn't want to upset their friends.
True, but she wasn't a true friend. She just knew she had to be friendly with me to snag my brother in law.
I’d probably prefer prefab than dealing with dodgy builders, and variations and defects and all that, but they seem pricy.
Prefabs come with all the same issues & more.
They still require builders to transport, deliver, place foundations, put it all together and complete the build with electrics, plumbing, carpentry additions, etc…. too.
Yeah am involved in a work project for some prefab buildings and honestly the prefab manufacturer is far worse than the two house builders I have built with previously.
Compared to building onsite, prefabs ain't really cheaper when you compare apples with apples and imo you sacrifice some longevity of the building in order to make them easily transportable.
Yep, exactly.
The prefab builder I know is based around the concept of terrible site locations. So 98% of the time is spent building under perfect conditions in a huge factory. Then it’s the major operation of delivery & install, when the timing is right.
Quality has really gotten up there, but they’re still mostly a big box. And the cost is bad.
Not windy enough, no runway..lack of appropriate propulsion system?¿…
When I looked at prefab homes, for what you get they actually seem more expensive
Yeah not cheap. They put a "nice" sticker price but if you were to ask around how much one actually paid in total to get it all done and ready to live in, nowhere near the price quoted.
Cheap container builds are more feasible but almost every states don't go easy on their approvals, just outright banning them.
That's because their shit, dangerous and have a life-span that's as little as 5 years before the Australian elements begin to make them crumble.
Containers crumble in 5 years ? Is your container made of biscuits or something ?
Those 20' / 40' sea containers shipping still using them after 20 years.
@dcep: And once you cut some holes in for windows, there goes the structural integrity that makes them last 20 years.
@dcep: As soon as you slice them up to use them for housing, they literally lose their long term structural integrity.
It's one of the many reasons why almost no one will lend you money for a build involving them.
Where I am I wanted a container instead of the shed I built and you can't even get a permit for them under any circumstances.
Despite not having a permit for the shed either I figured it would be easier to attempt to get it approved if I got pulled up down the line than a container having no chance.
Agreed. I don't think they are cheaper. The only positive is they are much quicker.
In Australia Prefab has, traditionally, been cheaply made holiday shacks; often made out of fibro cement.
We need quality Prefab systems, similar to those found in Germany. This will require someone to commit a lot of money up front and proper training on how to assemble onsite.
I was looking at prefab houses for a particular offshore Australian location. The ones available, rather than them being put on a boat from a manufacturer in Australia, were being shipped halfway around the world from Europe, including from Germany.
I remember seeing the fancy German pre-fab house on Grand Designs - https://www.granddesignsmagazine.com/grand-designs-houses/da…
I remember that episode. The truck arrived, along with a crew of Huf Haus guys to build it. In the UK. I doubt if they'd do that in Australia.
OP's eureka moment didn't work out quite like how they expected
…and yet one could argue he's put more effort into solving the issue than Australian governments have over the past decade.
The input costs of building a prefab - labour, materials, trades etc - is no different to a freestanding house. Since that's where the biggest costs are, a prefab isn't any cheaper in terms of say square meterage of livable area but then you add on the extra costs like transport and site installation on top.
In order to get a basic 3 bedroom, kitchen, living, laundry, bathroom setup it would be no less than building, and you still need space to put it since this isn't considering land.
If it made any financial sense then builders would have been capitalising on this many years ago.
I disagree - It’s definitely cheaper to make something in a workshop than to make it on site.
That’s why almost every house frame now comes in pre-fab sections and is craned into position - nobody builds a frame from scratch anymore.That’s why almost every house frame now comes in pre-fab sections
And why there's no savings to be made for prefabs - The frame is just a tiny portion of the total cost, and as you said they already aren't made onsite. A prefab will use the same frames.
Kitchen? Already precut, drilled, assembled and delivered. Trades? Still need the same amount of cables, GPOs, plumbing lines and taps. Plaster and paint still need installing.
As far as these trades are concerned it's the same amount of labour and materials on a new build as it is in someone's big shed, it's just the billing address that's different.
No, it's definetely cheaper to make house frames on site. But for speed, theft, accuracy, getting trades, it makes sense to prefab.
You really have no idea.
- Red tape in Australia.
- Banks aren't supportive, will generally need a larger deposit due to how the funds are realised in a traditional build at the various stages. Pre fab can go from slab to close to finished in a few days.
- CFMMEU. Not good for the union if all the work gets done offsite.
You are correct about banks not being supportive - prior to the build being completed you can get a mortgage against the value of the land only, with no consideration given to the cost of the building, or wait until property is complete with all services installed at which time your bank may consider the value of the improvements as well. So this type of build is really only for those who can afford to fund all of the upfront costs themselves.
Because s block of land in a regional town is $500k.
As others have said before, land is 50-95% of the cost, not the building.
However, assuming you can afford the land, if you need to borrow to build the house then you run in to significant complications.
You didn't define what you mean by prefabrication. Most volume builders would qualify as prefabrication given the sheer volume of materials they have in their supply chain. If you're talking about bespoke, single build prefabricated walls/floors off site then that's another issue.
Banks generally don't lend for the cost of building a prefab/kit/relocated home because they see it as a risk that it will be delayed in being built (or never finalised). These builds are generally not undertaken by larger builders and are engaged through different contracts. That delay (or unknown completion) essentially means the banks have lost any security if you default in the future. They will cite numerous relevant examples of your fellow prefab/kit/relocated home who borrowed tens/hundreds of thousands dollars for a prefab home and still have the materials sitting on site without being constructed 10+ years later.
It's a bit of a shame, but unless you look at alternative financing options to the major lenders (90+ percent of loans), it's never going to be a mainstream option.
Back in 2015 my partner and I were interested in buying land and a pre-fab house. Despite having no other debt and a 25% deposit the banks wouldn't lend to us because pre-fab houses are built off-site. So if something goes wrong or we aren't making repayments the bank can't repossess the house as it's not on the land until it's finished. So we just ended up buying a ~25 year old house on a block in a regional town. We were extremely fortunate with the timing, had we tried to buy here at this point in time we would not have been able to afford to buy here :(
build is cheap, land is not.
Thanks for the comments. I do feel there is corruption at play. Prefabs would get rid a lot of tradies on site. Reduce wastage, speed up construction time etc.
The industry says it's trying to get rid of the low quality prefab connotation. I've heard the prefabs in Japan and some European countries are much better.
I disagree with 'not enough demand for prefabs'. There is a huge opportunity for foreign companies to setup shop here.
At the end of the day, it's no different to Japan auto companies who are too slow to transition to Electric vehicles and make ridiculous comments for obvious reasons.
The problem with properly built prefabs is they need a stack of money spent, up front, to create the product and tool up the assembly service. You then have the issues of moving, and craning into place, the prefab blocks. Then people worry that their prefab house will look like everyone else’s house. Also a crane will not be suitable for every house block so you would need alternate ways of assembling the Prefab sections.
Personally I think the prefab is a pretty good option but there are investment risks up front. One of the Grand Design episodes was a guy trying to develop Pre Fab services in the UK and he was having trouble getting the business set up.
I do feel there is corruption at play
oooooooo-kay
tinfoil hat vibes
Direct from the mouth of a man who owns a prefab company: "prefab homes are not always cheaper. They can be quicker but in these times, not always."
Because there's very little land in Australia and we need more keep our tradies earning the mega bucks, so there will be a million regulations stating why something that is fine for Europe and usa is not good enough for Australia.
Mate, easy on the treasures. One told me once treasures are more important than nurses and deserves the hlgood money because they built buildings etc that people used. Without those buildings nurses wouldn't be able to care for people etc.
Because nobody who owns land + houses actually cares about the "housing crisis" - they only like to talk about it in the media (usually for personal gain)
At the end of the day, $$$ talks. Always has, always will. A small minority genuinely cares about those less fortunate, but its raw human nature to have a "survival of the fittest (or wealthiest)" mentality
Link to supplier?
Industry guy here -
We are seeing higher increases in pre-fab in certain parts of the buildings. There is increased interest in Prefab for mining and resourcing 'man camps'.Not so much residential. Commercial interest in building systems for apartments, retail etc. is increasing including curtain wall etc.
There is an increase pressure on cost of materials. When times are tough, contractors and tradies do up their own places to flip. They are getting tougher money wise.
Further to my comment above; you may interstate I'm in Sydney; there are many vendors like my employer that have displays in the upcoming Build expo in Sydney
https://www.sydneybuildexpo.com/exhibitors-sydneybuild-2023
Supply shortages are artificial- we have slow to act councils, people who benefit from controlling market in terms of supply i.e. landholders.
I've actually been thinking about whether this would be viable as a rental. Buy a decent size block of land somewhere close to a new university campus or commercial area on the fringe of the city, fill it with a bunch of demountable buildings and rent them to students/single workers.
I'm sure there's some sort of hidden cost or zoning issue that I'm not considering.
The bonus is that, when the land becomes worth more and the rest of the land around fills in, your land can be easily cleared for subdivision.
Council & neighbours will block it to death. Trojan horse would be possible method.
Saw one last year. Huge house, converted to childcare after build completion.
Get a couple of friends, put the following song on repeat, and do it yourself
Log cabin
Lot of misinformation here. OP has a point if we aren't talking about $1m+ homes. Not just about prefab but same argument can be said about 3D printed homes.
Build cost is significant in entry level areas. Take VIC for example, outer suburbs where a young person/couple may buy their first home - whether Werribee or Melton or Clyde… Land is only 50%-60% of the cost. A build does not need to be 300-400k for a basic 4 bedder in 2023 but it is. The industry has barely evolved in the past decades (if not gone backwards… Given how bad quality of work is nowadays).
In other countries we see tech like 3d printed houses in particular being extremely cost effective and quick (built in days, not months or years like here). Lobbying power of the building industry won't let that happen here easily. And government won't encourage it because the existing building industry is basically a job program. Even despite the pressing labour shortages and deteriorating standards.
The subject is worth being raised more. Building should be simpler, quicker and more affordable for those who want it. The tech is there.
Country is in a state where nobody can get a house built without months and months of stress. Buyer usually has to hire an inspector to make sure that the job is done right, and even if it isn't, there's very little leverage on the side of the buyer to encourage a builder to do the job right. The whole industry needs a good shake up particularly in the lower end of the price range. That's the segment of buyers who get burnt the most.
It’s so complicated, it seems pointless discussing.
Those of us in management work twice as hard, to achieve half as much. We’re paying more than we ever did, pulling-off trades to have them grace our presence, do the dead minimum, and leave a pigsty. Any/every mechanism to keep them honest works once… they just work for another builder. The turnover is gross.I’ve been on the tools, and ran my own small business. So I get it, that’s fine… have some power, finally get that overdue top-up. Enjoy your time in the sun. But the dumbest, shortsighted morons are controlling sites now. The cart is pushing the horse. 4-5mth builds are running to 12mths+. And everyone is paying dearly for it.
can imagine the frustration from your end too. Valid. the industry and the morons you mentioned are working in a way where the volume of these jobs will be halved in 10 years at this rate. And nobody will sympathise given how they've disrespected building standards all these years - when Teslabots or whatever mechanisms take over many of the jobs 2030-2035 - just like what happened to Taxis and their persistent low bar, once Uber took over.
The large reason is incentive.
The housing crisis isn't caused by a lack of housing but by the lack of regulation surrounding using property as investments.But yes also we are seeing a lot of poor quality construction at the moment and it would be good to see prefab become an industry. I figure it's just a lot to invest to try and break into a market that at the moment isn't interested.
Anecdotally I hear this prefab mob has been going from strength to strength.
https://www.uniplangroup.com.au/
I have nothing to do with them but used to live in the area they started in when they were called Timberline Cabins.
Their prices are pretty extreme these days and the designs leave a lot to be desired.
Largest cost is the land. prefab homes while they save some dollars are not the main factors. Add to that even prefab homes have the exact same building material shortages and are suffering many of the same increases in costs. Main benefit seems to be speed to getting a house at the sacrifice of flexibility in design.
If so, whats next? Capsule hotels?
A couple of problems here. Building houses costs a lot of money, but the main expense is in the land. Modular housing does not fix that.
The other problem is even if modular housing could reduce the cost, most people wouldn't want it. Why? Because it makes the house look cheap, like you've bought it from an IKEA catalogue. It won't impress your friends and neighbours. The 'let's make it cheap and everyone can buy it' thinking was tried in India with the Tata Nano car. Cheapest car by far on the market. It was a dismal failure, because anyone seen driving one was automatically assumed to be too poor to buy a proper car.
Too many variables.
People don't want copy and pasted solutions, if they did they'd buy an apartment.Also prefabricated homes aren't actually that cheap once you factor in everything. You'd maybe save 20% going prefabricated - but then you'd be compromising in terms of layout, design and it wouldn't be optimised for the block (plus you'd still need to pour a slab and do the utilities etc.
On my last job we were tossing up between bringing in a number of containers vs building a permanent office block and toilets.
If we rented the containers for more than 2 years it would've worked out cheaper to do a permanent build - this is largely due to the amount of labour and effort required in the initial setup.
If we bought the containers outright we would've ended up with an inferior solution to the permanent office block which would've degraded faster than a purpose built office and cost roughly 20% less.Bit of a silly post
Prefab isnt really cheaper (looked into it when thinking of building)Unless you are talking a container unit conversion lol
The problem is you are only looking at the housing problem today. You dont appreciate the causes of the problem, these need to be addressed otherwise there will be increasing numbers of more housing problems.
The real cause is of course the same answer for many other big city problems, the sell out of Australia to the world.
Want to know why traffic is shite, its because there are too many people in the big cities because of too many people.
Importing too many people into any country almost always makes that place worse - just like inviting too many people to live in your house is never a good idea.
Let 50 people into your. house to live, and guess what it will fail and cause a lot of problems. The answer is of course to avoid creating the problem in the first place.
Theres a practical size limit because problems only get worse, the housing crisis is an example of what happens. Almost no country on earth has ever solved this problem, its just so easy to show so many disasters - what makes you thin kthere is an easy or hard answer.
The bigger places like Sydney get the worse everything gets from housing, to traffic, to schools, hospitals and more.
There is only one simple answer, …
its the same answer we all have on our own homes, you dont go crazy and try and put 50 people in your house, because it just doesnt work.
Prefabricated Modular homes are fairly costly in Australia, because they are still a small industry, and the manufacturers charge a hefty premium for doing so.
Also, there are several costs associated with them that you won't encounter on a conventional build:
- trucking the building to site (much higher than the individual cost of bricks/timber frames/tiles/etc delivered to site)
- permits and support road/traffic management crews
- heavy cranes (used on medium/large apartments but never on low-cost houses)A large house of 350-500sqm is not realistic due to the number of seperate container-size modules you would need;
Customization is very limited partly due to the format of the building modules.We will probably see companies like Boxabl https://www.boxabl.com/ move into the modular home market here before long.
Long before Boxabl makes it here, 3D printed houses is set to make a huge impact on the cost and speed of building smaller, custom designed homes
https://www.slikbuild.com/houses
Where would they put them?