Editorial: Off-site modular housing hard to nail

Editorial

EDITORIAL

If we solve the housing shortage by constructing dwellings in much the same way as we make cars, life would be sweeter.

Houses built in factories, under a controlled environment with standardised components, would make the process better, cheaper, faster. Bulk-bought materials, assembled under cover, would keep the framing dry and with low emissions, controlling costs, timeframes and quality.

Unfortunately, the dream is yet to be realised with the sector blighted by a string of high-profile failures.

Last Friday, Auckland’s off-site residential builder, Podular Housing Systems became one of the largest collapses in the modular housing sector with an estimated deficit of $5.2 million,. The first report on the Wairau Valley-headquartered company from liquidators Benjamin Francis and Simon Dalton estimated more than $2m had been paid in deposits by customers whose homes weren’t started. That money was also in the general trading account, so customers’ deposits couldn’t be identified.

The Herald has featured buyers’ concerns after paying money for homes never delivered - in two customers’ cases, more than $500,000.

The Commerce Commission’s market study into residential building supplies out this week also cited off-site manufacturing. It encouraged “considering ‘new or innovative’ supplies, such as “green building supplies and novel prefabricated products, in the context of the broader themes of building for climate change and standardisation - offsite manufacturing and prefabrication”.

One of New Zealand’s most successful housebuilders said it was a good idea in 2020. Tony Houston, who once owned the west and north Auckland franchises of New Zealand’s biggest house builder G.J. Gardner, likened house building to car manufacturing He was then having new houses built in southern China, shipped over and craned on to sites at Hobsonville Point, and sold from $650,000 each.

After the first three, many more went up on neighbouring sites but Houston hasn’t spoken in public about how the project has progressed since, and there have been reported delays.

Last year, a modular apartment business that won $20 million of Government state housing agency contracts went into liquidation, abandoning two Auckland sites with partly finished homes. Integrated Modular Build, wholly owned by an Australian, was building 50 new apartments for state house developer Kāinga Ora Homes and Communities.

The company was forecast to have a $1.6m deficit and construction sector experts said it had left sites in sorry states with unfinished buildings.

Kāinga Ora said it had awarded $10m of construction contracts to the company on Kervil Ave, Te Atatu and $10m of work for a super-lot on Tonar St in Northcote.

Prefab housing is no quick solution, says Grant Porteous of G.J. Gardner. That business uses a level of prefabrication and smart systems and processes to speed up the entire build. But most of its homes are still built in the traditional way - on their sites.

It’s tempting to be starry-eyed about modular, off-site or prefabricated homes.

But those who have lost life savings when businesses fail are seeing more evidence of just how hard this housing crisis nut is to crack.