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Executive summary
Built different: Modern methods of construction

Australia is not building enough homes, and the homes we do build are taking too long to complete. Projections point to 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. Average construction times have risen 40 per cent since the pandemic. A new standalone home now takes 9.2 months to build. A new apartment building takes 2.4 years. 

Meeting Australia's housing needs will require building more and building differently. Modern methods of construction (MMC) encompass a range of construction approaches that move building activity, wholly or partially, away from the traditional on-site model. They can reduce construction times by 20 to 50 per cent, cutting two to five months from the average house build. At scale, they can cut construction costs by around 20 per cent. A 20 per cent saving would reduce the construction cost of an average apartment by more than $116,000. For a typical Sydney apartment building, it could lower construction costs by over $13.6 million. 

Despite these potential gains, modern methods of construction remain a niche part of Australia's construction sector. The barriers to uptake are mostly regulatory, though they also reflect the lack of industry scale, which in turn hinders uptake further. Australia's regulatory frameworks were designed for traditional on-site construction and create compliance complexity, cost and uncertainty for MMC projects. Financing structures tied to on-site progress milestones do not align with off-site manufacturing processes, limiting access to capital for buyers and producers alike. Fragmented development pipelines constrain the scale needed to make MMC commercially viable. State-based transport regulations add further cost and complexity. 

International experience shows that when modern methods of construction are embedded in national housing policy and supported by consistent regulation, stable demand and targeted investment, adoption can accelerate quickly. 

Without coordinated policy action, uptake will remain constrained. Realising MMC's potential in Australia requires reform across planning, building standards, financing and transport, alongside investment in workforce capability and pipeline certainty.


In partnership with

In partnership with Urbis


Report authors

Danika Adams

CEDA Head of Research

Author

Jonathon Mahon

CEDA Economist

Author

Clinton Ostwald

Urbis Partner

Contributing author

Danika Adams

CEDA Head of Research

Author

Jonathon Mahon

CEDA Economist

Author

Clinton Ostwald

Urbis Partner

Contributing author


Previous research

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