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Globally, sporting events like the Olympic Games and the Commonwealth Games have led to substantial public investment in the housing sector and the same has been experienced in the Australian market in the past. Following the 1956 Olympics held in Melbourne, approximately 600 houses within the athlete village were repurposed into public housing situated in West Heidelberg. Subsequently, after the 2006 Commonwealth Games hosted in Melbourne, the athlete village located in Parkville underwent a different approach, where a significant portion of it was sold and designated for social housing purposes.
The 2026 Commonwealth Games, which were planned to take place in Victoria, were supposed to have the same impact in the state’s smaller cities. The development in the region was supposed to accelerate social and public housing supply amid the severe housing crisis faced by Victoria. The same factors that are responsible for the housing crisis, including labor shortage and higher raw material prices, might have eventually contributed to the cancellation of the event in Victoria.
The intervention from the local and national governments in the form of incentives to developers and funding could, however, support the growth of the market in Australia. Prefabricated construction markets in Scotland and Sweden have seen the significant government support over the years, and this, in turn, has accelerated the growth of the market in these countries.
Another factor that is limiting the growth of the prefabricated construction market in Australia is the sector’s nature of not always taking risks. This has resulted in significant innovation challenges over the years. For prefabricated housing to become mainstream in the Australian market would mean major changes in the way things are done currently.
Even though the cancellation of the 2026 Commonwealth Games could decelerate the growth of the prefabricated construction market in Australia, other factors like the rental and housing crisis might provide the need for support from the short to medium-term perspective. The ability to offer more affordable and sustainable housing is expected to aid the demand for prefabricated units in Australia, leading to higher project approvals and investments over the next five years.
Based on the estimates of ConsTrack360, the prefabricated construction market in Australia is expected to grow at 12.1% to reach A$7.57 billion in 2023. From 2023 to 2027, the industry is expected to grow at a compound annual growth rate (CAGR) of 11.5%, while reaching A$11.6 billion by 2027. To tap into the growth potential of the prefabricated market in Australia, firms are looking to expand their manufacturing capabilities, a trend that has gained widespread momentum in the global market over the last 12 months.
Alongside the housing market, the adoption of prefabricated construction practices is also gradually increasing in other construction sectors. DXN, the Australian data center firm, entered into a strategic partnership with AngloAmerican to supply a modular data center. As part of the A$1 million deal, DXN will manufacture and deploy the prefabricated module at a CapCoal mining site in Queensland. The delivery of the modular is expected to happen in September 2023.
Before this, DXN delivered over 18 prefab data center modules to customers including gold-miner Newcrest, Boeing, and Covalent Lithium. Furthermore, the company has provided prefabricated cable landing stations to support the Belau Submarine Cable Company's new cable spur, connecting to Palau. Additionally, DXN has also supplied a landing station to Sub.co on the Cocos (Keeling) Islands for the Oman - Australia Cable project.
All of these prefabricated construction projects are expected to keep supporting the growth of the market from the short to medium-term perspective. However, the cancellation of the 2026 Commonwealth Games can slow down the adoption of prefabricated practices in the housing sector from a short-term perspective.
