'New thinking': Modular homes factory to 'turbocharge' NSW housing supply

The New South Wales government is looking to partner with construction companies to create a new modular housing factory to "turbocharge" the delivery of new homes.

It is opening a tender process for a Modern Methods of Construction Innovation Facility, where prefabricated housing modules and components could be built faster and more cheaply.

The model would involve large sections of rooms being constructed off-site in a dedicated facility before being transported to new developments across the state.

"The way we build homes has barely changed for generations," premier Chris Minns said in a statement.

"But the housing pressures facing NSW demand new thinking, new technology and new solutions.

"That's why we are backing modern methods of construction that can deliver high-quality homes faster, reduce construction times and help take pressure off costs."

Partnership with private sector

Planning Minister Paul Scully said the move would help overcome the rising cost of construction, one of the main barriers to increasing housing supply.

"There can be savings of up to 20 per cent in time, and 50 per cent in cost when it comes to using modern methods of construction," Mr Scully told the ABC.

"The New South Wales government is wanting to turbocharge the way homes are built in New South Wales by unlocking the potential modern methods of construction."

The announcement came ahead of the state government's 2026 budget which was set to be handed down on Tuesday, but there's no dollar value attached to the plan at this stage.

"The government is looking at what the private sector is looking for to support the establishment of one or more modern methods of construction facilities in New South Wales," Mr Scully said.

"That could be a range of things. It could be an equity position, it could be land, it could be training, it could be a whole range of options."

He said the facility would focus on delivering components for medium density housing projects, working within the state government's housing pattern book — a series of new templates designed to be adopted by developers in order to bypass lengthy design and approvals processes.

Mr Scully said he was hoping to create multiple facilities around the state to deal with growing housing shortages.

"This is about making sure that we're gearing up the private sector and hopefully creating multiple sites, multiple participants to add this new approach to delivering more homes."

'A great solution'

NSW Executive Director at the Property Council of Australia Katie Stevenson called the plan a "game-changer" for the industry, and that scalability was key.

"We need to be building more homes than ever before and we simply can't do that using traditional methods of construction," Ms Stevenson said.

"It takes far too long and we need to be pulling out all of the stops if we're going to be tackling the housing crisis head on."

Modular methods of construction, she said, just meant looking at modern ways of building.

"That might mean looking at a pre-fabricated buildings that can be put up on site, but are manufactured in a factory somewhere, so instead of taking two weeks to put up a frame it may only take a couple of days.

"It doesn't sacrifice quality and there are some real sustainability benefits as well, so it's a great solution."

She added that the council was excited at the prospect of being able to build homes in half the time compared to traditional methods.

"Most importantly, today's announcement overcomes the major challenge that the local industry has had, which is that we've needed to rely on offshore manufacturing of components in order to build through these modern technologies."

The two-stage tender process was due to open in coming weeks.