$54m funding to fast-track home construction
The federal government has announced a $54 million funding to support state and territory governments in boosting prefabricated and modular home construction.
As part of the 2025–26 federal budget, released on 25 March 2025, the Labor government has allocated $54 million to the construction industry to supercharge new builds of prefabricated and modular homes.
Out of the $54 million, the Labour government will allocate $49.3 million to help state and territory governments accelerate prefabricated and modular home construction.
The funding will support local programs to expand the prefab and modular housing industry.
The remaining $4.7 million will be allocated to developing a voluntary national certification process for offsite construction, which will streamline approvals while maintaining high-quality standards.
Minister for Housing, Clare O’Neil, said building new homes faster will help tackle the housing crisis.
“We’re tackling the housing crisis head-on by building more homes, using new technologies, and making it easier for Australians to buy them.”
“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,” O’Neil said.
A recent study from the Property Council of Australia has predicted the country will fall 462,000 homes behind the 1.2 million new homes national housing target by 2029, if nothing changes.
NSW is predicted to have the biggest shortfall, with 185,000 homes, followed by Queensland with 96,000 homes and Western Australia with 56,000 homes.
The Australian Bureau of Statistics’ Building Activity data for the 2024 September quarter showed that only 44,884 homes had been built across Australia, lagging 15,000 homes behind the national housing target, which started in July 2024.
Collectively, the Labour government said the $54 million investments will provide regulatory certainty, foster a sustainable work pipeline, encourage private investment, and enhance advanced manufacturing capabilities in the sector.
Minister for Industry and Science, Ed Husic, said building houses faster with prefabricated and modular homes will create a steady and predictable demand pipeline for the industry.
“Making a house in a factory instead of onsite can cut construction time in half,” Husic said.
“For the first time, manufacturers and home owners will have a national certification process to cut the red tape that has been holding back use of these techniques.
“And they will see federal and state governments working together to invest in growing our capability to make factory-built quality homes.”
The Housing Industry Association (HIA) said the initiatives show a shift towards innovation and affordability in residential building, with the national certification scheme being key to streamlining approvals and ensuring regulatory certainty.
HIA managing director, Jocelyn Martin, said that while the industry welcomes the announcements, more needs to be done to deliver new dwellings.
“Workforce shortages are also holding the industry back. More targeted investment in training and attracting skilled workers into residential construction is essential to lifting output,” she said.
A recent Productivity Commission report, Housing Construction Productivity: Can We Fix It?, showed that the housing construction sector completed half as many homes per hour worked as it did in 1995.
The commission identified the “complicated and slow” approval process and labour shortages in the residential construction industry as key obstacles hindering housing supply and productivity.
“While these initiatives are encouraging, they must be backed by broader and deeper reforms if we are to meet the national target of 1.2 million new homes over five years,” Martin concluded.