InsightBuilding Blocks of Change: transforming housing supply
Imagine if, in the pursuit of solving one problem, we could address multiple challenges at once. That’s the power of the idea I’m about to share – a ripple effect that extends beyond housing supply and affordability, touching the realms of equity, sustainability, accelerated innovation, and industry transformation.
Recent data in the housing sector (Oxford Economics, CoreLogic) suggests the light at the end of Australia’s housing supply tunnel is dimming. Current record net overseas migration (NOM) levels are predicted to remain elevated for some time. The number of dwellings being constructed is falling, with construction costs and interest rates only partly to blame. New build approvals are outpacing the speed of construction, and it’s anticipated we’ll continue through a dwelling delivery trough for some time. The median Australian rent has hit new records, as we see declining rental vacancy rates and increasing rental growth. Aspirational dwelling supply targets have been agreed upon; however, the targets surpass what we have historically been able to deliver. Adding fuel to the fire, it is widely established that the construction industry is facing productivity, predictability, precision, digitisation, and sustainability challenges.
A complex web of levers exists; however, when pulled in the right direction, they can contribute to a much brighter light at the end of the housing supply tunnel.
The NSW Government recently initiated a ‘pattern book’ housing approach complemented by accelerated planning approvals and transport-oriented development programs. These initiatives are a smart step forward, welcomed by community members and housing industry stakeholders alike.
The pattern book approach automatically lends itself to Design for Manufacture and Assembly (DfMA) and Modern Methods of Construction (MMC) principles in the pursuit of speed-to-market, quality of construction, and improved productivity. But why not explore options to take this pattern book concept even further? Imagine if, in the pursuit of solving the housing supply crisis, we could address multiple challenges at once:
- Speed to market and guaranteed supply of housing to meet demand
- Demonstrated world-leading standards in quality and net zero targets
- Stimulate regional jobs growth and skills training
- Industry transformation – productivity, predictability, precision, digitisation, sustainability
- Innovation and investment accelerator – framework and IP expanded nationally and across other asset classes, exported internationally
The idea of a white-label digital kit-of-parts for the housing sector represents a significant step forward. Picture a collection of building blocks with precisely defined specifications but enough flexibility for industry players to integrate their Intellectual Property (IP) and foster ongoing innovation. This stringent specification must account for the performance of each part individually, how they function collectively and connect, and focus on achieving net-zero targets. This approach would empower the industry to continuously innovate and leverage its IP in various aspects, including manufacturing methods, assembly techniques, overall design aesthetics, and community integration. A white-label digital kit-of-parts would provide the Lego bricks to solve the housing crisis while enabling innovation and safeguarding IP rights within the housing sector.
In parallel, the NSW Government needs to play a vital role in the certainty and confidence of a pipeline for manufacturers by engaging with and providing assurance to the lower tiers of the supply chain. High capital investment is typically required at the lower level manufacturing tiers to improve manufacturing-led productivity and quality outcomes; however, supply pipeline certainty is also necessary to sure-up investment. A warehousing and complexing body (potentially a government-initiated ‘special purpose vehicle’) could bridge the gap between manufacturing supply and on-site assembly demand. It would offer stability to the manufacturing pipeline, instil confidence, and facilitate market investment in the manufacturing supply chain. Additionally, this entity could ensure adequate stock levels to meet demand in supplying the physical kit-of-parts to the market. Strategically positioned, it could also stimulate regional job growth and provide skills training in MMC.
Once established and proven, the white-label digital kit-of-parts framework and industry IP can expand nationally or even be exported internationally. You could envision the expansion of such a framework across other asset classes with similar levels of standardisation, repetition, and volume. Imagine a stable and equitable housing supply with a ripple effect across the realms of sustainability, innovation, and industry transformation.