CommBank now allows progress payments on eligible modular homes built offsite
PrefabAUS, the peak body for prefabricated and offsite construction, has launched an industry-wide standard contract for prefabricated homes that ties payment stages to manufacturing milestones. The contract targets one of the main barriers to financing factory-built housing, Commonwealth Bank (CommBank) said.
The contract was developed with CommBank sponsorship. Builders, manufacturers, customers, and lenders can use it regardless of which lender funds the build. Separately, CommBank has changed its own lending policy so eligible customers can access funds while their home is still being built offsite.
Why prefab finance has been a sticking point
Conventional construction loans release money in stages as work is completed on the buyer's land. Prefab doesn't fit that model. Most of the home is made in a factory, then delivered and pieced together on the block, so manufacturers expect staged payments long before the home arrives on site.
CommBank, in an announcement, said that mismatch has left buyers, manufacturers, and lenders without a shared view of payment timing.
PrefabAUS executive chairman Damien Crough said "prefabricated construction has been constrained by contracts designed for traditional, site-based delivery."
"We've already introduced changes to our lending policy to better support prefabricated housing," said CommBank home buying general manager Rebecca Markwell (pictured).
Lester Raikes, managing director of prefab builder Anchor Homes, said having a major bank offer a product suited to prefab "has been a game changer in terms of client confidence."
Speed gains, but no bargain-basement pricing
Raikes said the factory build typically takes eight to 12 weeks once a contract is signed, although design, documentation and planning can still take months.
He cautioned against expecting a steep discount, describing modular homes as affordable rather than cheap. For knockdown rebuilds, however, manufacturing can begin while owners are still in their existing home. That cuts the time they spend in a rental, along with the moving costs.
Regional demand and the national housing target
Raikes said demand is strong in regional Victoria and New South Wales, where, in some areas, local builders can be booked out for years. Up to around 80% to 90% of a modular home can be built offsite, so far less of the work depends on trades being available locally.
PrefabAUS said prefab remains a small part of Australia's housing market but has significant potential as the country works towards 1.2 million new homes by 1 July 2029.
That deadline is already slipping. The National Housing Supply and Affordability Council's August 2026 quarterly report now expects the target to be met in the December quarter of 2030, even as a record 244,000 dwellings were under construction in the March 2026 quarter.
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