Australia's reliance on tired construction models to meet our national housing target has created a crisis only an international solution can solve, writes Dr Ehsan Noorozinejad.
Why the multi-billion-dollar Chinese prefabricated housing industry can help resurrect Australia's abysmal home construction productivity
Australia's housing debate keeps going around in circles. One month we talk about negative gearing. The next month, we talk about first-home buyers. Then we talk about migration, planning rules, renters, investors and interest rates. All of these matter. But they do not answer the most important question. Who is actually going to build the homes?
The latest federal budget again shows the scale of the problem. The government has announced major housing measures. It plans to limit negative gearing to new residential builds from July 2027. It will also change capital gains tax rules by replacing the 50 per cent discount with indexation and a 30 per cent minimum tax on real capital gains. The aim is to shift investor money away from existing homes and towards new supply. The budget also includes a further $2 billion for local infrastructure such as roads, water, sewerage and power. The government says this can support up to 65,000 homes over the next decade.
These measures are not meaningless. Infrastructure funding is important. Faster approvals are important. Tax reform may change investor behaviour. But none of this changes the core reality. Australia does not have a housing announcement problem. It has a housing delivery problem.
The National Housing Accord target is 1.2 million new homes over five years to June 2029. Yet the National Housing Supply and Affordability Council says only 219,000 homes were completed over the first five quarters of the Accord period. The latest approvals data tells the same story. In April 2026, total dwelling approvals fell 3.4 per cent to 16,710. That is below the rough monthly pace Australia needs if it is serious about delivering 1.2 million homes in five years.
Productivity crisis in construction
Australia still builds too slowly and projects still get stuck in approvals. Builders still face cost escalation, labour shortages and insolvency risk. Factories are not yet operating at the scale needed, while banks, insurers and certifiers are still cautious about unfamiliar building systems. The Productivity Commission has made the problem very clear. Australia is now completing about half as many homes per hour worked as it did in 1995. Even after adjusting for bigger and better-quality homes, housing construction productivity is 12 per cent lower than it was three decades ago. The broader economy, by comparison, has become 49 per cent more productive over the same period.
This is the hard truth: Australia cannot build enough homes quickly if it relies only on the same construction model that helped create the shortage. We need a new supply strategy, one that should include international construction partnerships. This does not mean importing cheap boxes, lowering standards or replacing Australian workers. It means accepting that other countries have capabilities we need.
Global examples of industrialised housing
Japan has decades of experience in industrialised housing and precision factory-built systems. Major Japanese companies helped pioneer prefabricated housing and have built deep capability in repeatable, high-quality housing production. Singapore has pushed prefabricated prefinished volumetric construction, known as PPVC, to improve productivity, quality and site conditions by manufacturing building modules off-site and installing them efficiently on-site. European countries such as Germany, Austria, Sweden, Finland and the Netherlands have strong experience in timber, passive house, circular construction and off-site manufacturing. A European Commission-linked research note says off-site construction can reduce costs, improve productivity and deliver environmental and social benefits, but needs scale to work properly.
China has major modular manufacturing capacity and is already exporting prefabricated building systems internationally. Chinese prefabricated building exports grew from US$1.47 billion in 2015 to about US$4.34 billion in 2025, with Australia among the destinations, according to Chinese state news outlet Xinhua.
A partnership model for Australia
Australia should not copy any one country. That would be lazy policy. Our climate, codes, labour market, politics and community expectations are different. But we should build with countries that have already solved part of the problem. A serious national housing strategy would invite experienced international MMC companies to form joint ventures with Australian builders, developers, community housing providers, universities, TAFEs and state governments.
The model should be simple. Overseas partners bring technology, factory systems, digital design, robotics, modular platforms, quality-control processes and skilled supervisors. Australian partners bring land, approvals knowledge, local labour, compliance expertise, assembly capacity and long-term maintenance responsibility. The homes must still meet the National Construction Code. They must meet Australian Standards. They must be designed for Australian conditions, including heat, flood, bushfire, cyclone risk, accessibility and energy performance. But the supply chain does not have to be entirely local from day one.
Australia already imports cars, trains, medical equipment, renewable-energy components, electronics and defence technologies. Housing should not be treated as completely different. A smart model would start with social housing, affordable rental housing, regional worker housing, student housing and key-worker accommodation. These building types are often repeatable. They are suited to modular and panelised systems. They can create predictable demand, which is exactly what factory-based construction needs.
Phased implementation
The first phase could import components: bathroom pods, kitchen pods, wall panels, floor cassettes, service risers, façade systems and structural modules. These can reduce site labour, improve quality and speed up delivery. The second phase should establish port-based assembly hubs near major freight routes. Imported components could be checked, completed and assembled locally. Australian workers would still do site works, installation, services, certification, maintenance and upgrades. The third phase should require technology transfer. International companies that win public housing contracts should train Australian workers, partner with local manufacturers and help build domestic factory capacity.
That is the key point. The goal is not permanent dependence on overseas factories. The goal is to use international capability now while building Australian capability for the future.
Addressing concerns
Some will say this approach threatens local jobs. But the greater threat to local jobs is a construction sector that cannot scale, cannot attract enough workers, and cannot deliver the homes the country needs. International MMC partnerships could create new Australian jobs in factory assembly, logistics, digital design, installation, inspection, maintenance and advanced manufacturing. Others will worry about quality. That concern is valid. Poorly regulated imported housing would be a disaster. That is why Australia needs a strict trusted-partner framework. Every system should be pre-certified and every design checked by Australian engineers before shipment.
The choice is not between Australian construction and foreign construction. The real choice is between pretending we can solve the crisis alone, or building a modern housing delivery system with the best partners we can find.
Conclusion
Australia's housing crisis is now too large for slogans. It needs land. It needs planning reform. But above all, it needs the physical capacity to build. The federal budget has opened another chapter in the housing debate. But unless Australia becomes serious about construction capability, the gap between promises and homes will remain. We do not need to outsource Australia's housing future. But we do need to open the door to global construction partners who can help us build it faster.
Dr Ehsan Noroozinejad is a senior researcher and Global Challenge Lead at Western Sydney University who writes about innovative housing policy, modern methods of construction, and urban resilience. He advises governments and industry on affordable-housing strategy and has appeared on ABC News, ABC Radio National, Sky News, The Guardian, The Policymaker, The Sydney Morning Herald and The Conversation.
