Expert Warns of Risks in China-Made Modular Homes for Australia's Housing Crisis

An expert is cautioning against Australia's growing reliance on China for the manufacturing of modular home components, citing potential risks to quality, logistics, and ethical practices. The trend has emerged as a significant solution to the nation's severe housing shortage.

UNSW Sydney professor Riza Yosia Sunindijo has highlighted quality and logistical concerns following Metricon's recent construction of two prefabricated homes in Melbourne. In this project, approximately 90% of the materials were manufactured in China and then assembled on-site in Australia. This approach has been promoted as a way to accelerate construction amid ambitious government targets.

The Australian government aims to build 1.2 million new homes by mid-2029 but was reportedly 77,500 homes behind schedule as of April. Prefabricated and modular housing has been encouraged by the government as a means to expedite the building process.

Professor Sunindijo pointed out several downsides to manufacturing components overseas, including potential impacts on quality. "There are risks associated with long transport distances, shipping damage, changes in exchange rates, and transportation delays," he told the Daily Mail. He emphasized that verifying compliance with the National Construction Code and Australian Standards must occur during the design and manufacturing phases, as it is often impossible once components arrive in Australia.

He also questioned the practicality of over-reliance on a single country. "China has a large and sophisticated manufacturing sector, allowing them to produce these housing components in a timely manner and with competitive pricing," Professor Sunindijo acknowledged. "But it is also sensible to avoid excessive reliance on a single country and to maintain alternative sourcing strategies for critical components."

Further concerns were raised regarding labor conditions, material sourcing, and manufacturing practices in China. Questions about fair treatment and pay for workers, responsible material sourcing, ethical component production, and the environmental impact of manufacturing processes were highlighted.

Professor Sunindijo suggested that depending heavily on imported housing components could mean Australia misses out on opportunities to develop its own manufacturing sector. "Local manufacturers could create new jobs in design, engineering, robotics, and advanced manufacturing, while providing safer and better work conditions for the workers," he stated.

Despite these reservations, Professor Sunindijo acknowledged that modular housing could positively impact the shortage of skilled tradespeople. "It could reduce the amount of traditional on-site construction work required, which can be a good thing given the labour shortage facing the Australian construction industry," he said. Infrastructure Australia's 2025 Infrastructure Market Capacity Report indicated a shortage of approximately 141,000 workers on public infrastructure projects, with a potential shortfall of up to 300,000 construction workers by 2027.

He reiterated that modular housing is a viable solution for building more homes more quickly, especially given the labor shortage, rising costs, and low productivity in traditional construction. "Australia needs affordable and quality houses urgently, so given the labour shortage, rising costs, and low productivity in construction, modular housing is a way to address these issues," he said.

Should modular housing become more widespread, Professor Sunindijo noted that workers would require additional training and new skills, including competencies in designing, installing, and working with modular components. "They have to have the right competency to design, install, and work with modular components," he said. "For instance, instead of constructing a home using the usual power tools, workers would need to change the ways they work, like using a crane." He also indicated that work health and safety protocols would need re-evaluation.

Professor Sunindijo's comments align with the federal government's National Housing Supply and Affordability Council, which supports the idea that increased use of prefabrication methods could help the country achieve its housing targets.