Policy changes announced in late January by the Commonwealth Bank are set to support local manufacturers, making construction costs cheaper and offering Australians a chance to access the property market in the short term.

Mike Vacy-Lyle, Group Executive Business Bank at the Commonwealth Bank, explains, “Prefabricated construction is fast, efficient and can play a meaningful role in addressing Australia’s housing shortage. To date however, everything about construction has been created on-site work in mind, and we need to rapidly reimagine how we support this industry to unlock scale and deliver more quality and sustainable homes to market sooner.”

Prefabricated homes, or off-site fabrication, refer to any part of a building that has been constructed at a location other than its final destination, such as in a factory, rather than on-site. Said to cut costs and speed up construction delivery, prefabricated homes are gaining traction in the property and lending industries, despite mixed sentiment among potential customers.

“Prefabricated homes can be built significantly faster than traditional homes, making them a great option for buyers looking to move in quickly,” shares Hany Hanna, Director at GetMyFinance. “Historically, securing a mortgage for prefabricated homes has been more complex, though policy changes like CBA’s recent update are improving accessibility.”

Dr. Michael Baumann, Executive General Manager (Home Buying) at the Commonwealth Bank explains that this policy change is one of many innovative products aimed at supporting homeownership in Australia.

“We also offer a range of other innovative products, such as Property Share, which allows customers to split the cost of buying a home with family and friends, Dr Michael shares. “In addition, we (accept) pre-sale contracts (up to 10%) secured through property tech platform, Coposit, for residential development projects funded by CommBank.”

Coposit is designed for property hunters seeking off-the-plan homes, allowing contributions to the full deposit while the property is being built.

Jade Pearsall, Managing Director at approved.au, explains that her experience with prefabricated home buyers varies and largely depends on how well they understand and navigate the planning and approval components of the project.

“A prefabricated home is not automatically exempt from local council regulations, and the approval process depends on factors such as land zoning, bushfire or flood risks, and utility connections.

Prefab homes still need to be connected to water, sewer, electricity, and stormwater, which may require additional permits,” Jade notes. “Engaging a town planner early can help navigate the approval process smoothly.”

Leana Hassan, a young Therapist and Business Manager living in Sydney, says that while she plans to purchase a property one day, her focus now is on improving her credit score rather than focusing on recent announcements.

“I know the new lending changes mean I can get my foot in the door and improve my credit score, but there are so many questions I have about how ownership works more practically, so I’m hesitant – especially for other young people who could be possibly rush into something without thinking long-term,” says Leana. “I wouldn’t want to rush into something without thinking about the long term.”

Aaron Salvador, a graphic designer based in Sydney, is also cautious about the growing interest in purchasing prefabricated homes, preferring traditional-built homes that suit a growing family.

“As someone who appreciates the charm and character of older-style homes, I don’t find prefabricated homes appealing aesthetically,” says Aaron. “Finding a property that is both spacious and affordable often requires compromising on location, which can affect my support network and overall quality of life.”

“This trade-off presents a significant challenge in the current market.”

These changes, along with the Federal Government’s recent ban on foreign property purchases, offer Australians more information for investment purposes as government and industry leaders work to address greater homeownership across the country.