Modular homes a valuable addition to the market

Aside from the odd mechanic or motor enthusiast, most of us would never think of building our own car. We know that these vehicles, so important to our daily lives, are reliably and affordably manufactured. Yet when it comes to our homes – by far the biggest investment most Kiwis make – we still mainly build each one from scratch. This takes time and, as we see from the affordability statistics, a great deal of money.

Auckland is listed as ‘severely unaffordable’ in all 15 of Demographia International’s Housing Affordability Surveys, including 2019, ranked as the seventh-least-affordable housing market out of the 91 markets surveyed.

One way to address this affordability challenge is to manufacture homes to obtain the scale and cost reductions we enjoy with cars and other products that we trust and depend upon. Around the world, homes manufactured in factories, known as modular homes, are playing an increasingly important part in the building and construction sector.

At Neilston Group, we began investigating the affordability challenge more than five years ago. We explored lots of different options. New Zealand has a long tradition of prefabrication, format design and standardised building units to try to reduce cost.

But we wanted to go a step further. Could we design and specify a high-quality terrace home for New Zealand conditions that we could have manufactured in one of the world’s volumetric modular construction centres?

More than three years of focused research and development is now entering its most exciting phase. Our challenge is ongoing, but in bringing our first product to market, we’ll find out how Kiwi home buyers respond to our initial production model, and we expect to keep getting better and further refining our design and production methods. Tony Houston, Managing Director of

Neilston Group New Zealand’s first three Modul homes – one of which is an Open Home – are in Nuggett Ave in Auckland’s Hobsonville Point. These are freehold, terrace houses, across the road from the Hobsonville Point secondary school. In the coming months, we will install a further 13 new homes of this type up Nugget Ave to Buckley Ave, 12 of which will be Axis Series homes, offered to the market at $650,000.

What are modular homes

These homes are designed by Shanahan Architects for Kiwi home buyers and for New Zealand conditions and lifestyles. They each comprise four modules – two six-metre modules downstairs and two nine-metre modules upstairs. These modules are then connected internally, leaving the exterior steel construction as the outer walls and roof. Each modul arrives complete with all fittings and finishing for the interior of the home. Appliances are added here. They are double-glazed and fully insulated and have been designed and built so we can seek a New Zealand Green Building Council 6 Homestar rating.

A feature of Modul homes is that they are a standard design and format. This is key to producing homes as a manufactured product. We opted for three-bedroom, 1.5-bathroom, two storey terrace homes with front and back decks and a small, low maintenance back yard, believing this format to be the most attractive across a large cross-section of the market.

There’s no choosing tiles, flooring, or benchtop, or any of the decisions a buyer has to make building from scratch, and even in some apartment off-the-plan purchases. This won’t suit everybody. But it will suit buyers looking for an affordable, highquality, low maintenance, terrace home with nothing to do except furnish and move in. There’s no bespoke design or decisionmaking during the build on the way to purchase – an aspect that helps reduce cost and keep things simple. It’s early days, but initial market response is that this simplicity and standardisation is attractive to many buyers.

Modul homes are manufactured at a factory in Guangzhou, China, shipped to New Zealand, and installed onto their foundations. Finishing work, which involves connecting the modular sections of the house, as well as landscaping, takes a further few weeks. The three homes at Hobsonville Point were installed on June 2, 2020, and you can watch a time-lapse of the installation of three homes in a single day on the Modul website: https://modul.co.nz/why-modul/ how-it-works-the-modul-process/

Our manufacturing partner produces 10 million square metres of accommodation a year, offering an ability to scale up production to meet demand as it grows. We can be building the foundations on site at the same time that the modules for new homes are being manufactured, thereby reducing construction time. Manufacturing the homes in the factory takes four months. We expect the average time between buying off the plans and moving into a Modul home will be around six months, roughly half the market average.

Permanent modular construction of the type we are using has demonstrated time and cost savings in markets where it’s more established. Research from the University of Utah in the U.S. shows that modular construction, on average, reduces construction time by 45%, and cost by 16%. Modular construction is being used around the world for hospitals, schools, offices, hotels and retail, as well as residential housing. We don’t know yet precisely what these figures will look like in a New Zealand market context, but we expect there will be room to pass savings on to customers to ensure we’re providing value at the affordable end of the market.

Helping address industry challenges

Modular construction at scale for residential homes is new to the New Zealand market, and will obviously be a small part of the market for a number of years. But it can immediately begin to contribute to challenges that the industry faces by:

• reducing stress on skills capacity • supporting improved quality control

• reducing waste

• reducing hazard and disruption for new builds in built-up areas.

Modular construction requires trades people and builders, but does reduce the labour demand for the total build. This helps take pressure off our industry at a time when capacity is stretched. BCITO estimates that 80,000 new and replacement jobs are needed in the New Zealand construction sector in the medium term.

Secondly, being a manufactured product, we expect to see improved quality control. A BRANZ study showed 91% of new homes had non-compliance defects, and 73% of new home owners in BRANZ 2014 home owners survey had to recall their builders to fix defects.

Thirdly, modular homes help reduce waste by manufacturing components off-site. In New Zealand, 50% of waste to landfill comes from the construction industry.

Fourthly, modular construction is wellsuited to building in already-built-up areas. Component modules are trucked and craned into place with multiple homes able to be installed in a single day. Neighbourhoods avoid months of hammering, sawing and drilling that accompanies on-site construction. And there are fewer truck movements.

It’s early days, but there’s no doubt that modular homes manufactured off-site can play a key role in ensuring the industry can provide more new homes at more affordable prices for more Kiwis.

Tony Houston, Managing Director of Neilston Group

Tony Houston is the Managing Director of Neilston Group, the developer behind Modul homes which launched in August at Hobsonville Point after more than three years of research and development. www.modul.co.nz