Housing solution for priced-out Aussie buyers as CBA announces major lending change: ‘Viable’

Prefabricated homes have been hailed as an “immediate solution” to Australia’s housing crisis and it’s now become easier for Aussies to buy one. Commonwealth Bank (CBA) has announced it would begin offering loans for prefab home builds, an industry expected to triple in value over the next decade.

Prefab homes are constructed off-site, often in a factory, and then transported to the individual’s desired location, making them a cheaper option than traditional housing. They can be built in a matter of weeks and, for granny flats, prices can start at just $52,000.

Sydney woman Angela is looking to buy a prefab home to live in when she retires from her research institute job. The 57-year-old told Yahoo Finance it was a much more affordable housing option for her, given skyrocketing property prices and rising rents.

RELATED

Landlord with 118 properties hits back at calls to lower rents after RBA interest rate cut: ‘Ridiculous’

Rare $2 coloured coin worth up to $650: ‘Worth keeping an eye out’

Woolworths, Coles, Kmart penalty rate fight intensifies in major intervention for 353,200 workers

“I live in Sydney so buying anywhere here is completely out of the question,” she said.

“I’m nearing 60, so I’m looking at it as an actual viable retirement plan for me. I currently work in Sydney so I rent in Sydney but that’s not viable for my future.

“Buying a block of land, probably in country New South Wales where my family live, and getting a prefab home is something that is affordable.”

Do you have a story to share? Contact [email protected]

Angela got the idea to buy a prefab home from her dad, who is currently going through the process himself.

He paid $75,000 for a one-bedroom home, along with about $250,000 for a block of land in country New South Wales.

The home took six weeks to build and he is planning to move in once he completes the development approval process with the local council.

Other Aussies like Central Coast university student Eryn Norris have opted to set up prefab homes in their parents’ backyards.

The 24-year-old bought her 42 square metre home for $98,000, which comes with a bathroom, bedroom, and combined kitchen and living space.

It is set up at the back of her mum’s place and connected to the main house’s electricity and plumbing.

“Mum loves it. She enjoys that I’m close but I can still have my space and she has an extra bedroom back in her house,” Norris told Yahoo Finance.

Commonwealth Bank announced last month that it would work with industry body prefabAUS to develop a standard form contract for purchases of new prefab homes. It plans to offer loans from the next quarter.

Homeowners have traditionally been required to pay up to 90 per cent of construction costs for prefab homes, with banks only lending for the final 10 per cent once the home has been transported to the site.

Under CBA’s banking-first move, the major bank will lend customers up to 60 per cent of the total contract price - and up to 80 per cent if they use a bank-accredited manufacturer - before the prefab home is affixed to the land.

CBA executive general manager of home buying Michael Baumann said prefab homes were a great housing option for many Aussies but had been historically challenging to finance, with customers needing to cover most of the upfront costs.

Norris said she received a loan from a family member to buy her prefab home, while Angela said she planned to use savings to pay for her prefab home upfront.

“We want to alleviate some of the financial barriers associated with prefabricated properties,” Baumann said.

“We believe these upcoming changes will help to achieve just that, giving more Australians the chance to look at this way of building a home, which could, in turn, help deliver more supply to market faster.”

Prefab building company PennyGranny estimated the new financing could unlock backyard housing for more than half a million Australians, with 655,000 households across the major cities legally able to add a granny flat.

“With backyard space going unused in cities across Australia, prefab granny flats could be an immediate housing solution,” PennyGranny founder Michael Doubinski said.

“If even a fraction of eligible homeowners or landowners take advantage of this, we could see thousands of new homes built quickly, easing the rental crisis and providing more affordable housing options.”

PrefabAUS has estimated that 680 companies in the industry made $11.4 million in revenue in 2023, which is 7 per cent of the value of construction across residential and commercial building.

It expects this figure to grow to 30 per cent over the next decade.

Get the latest Yahoo Finance news - follow us on Facebook, LinkedIn and Instagram.