Housing Minister Phil Twyford says he expects more than half of the promised 100,000 KiwiBuild houses to be pre-fabricated and is looking for local and overseas companies and investors to put in bids for the work.
Twyford is leading plans for 100,000 "affordable" houses for first home buyers over the next 10 years. More than half are tagged for Auckland but only a handful are under way as Twyford seeks to get the initiative up and running.
However, the property industry and Treasury have said the government will struggle to deliver on it because of the supply and cost of land and shortage of workers in construction.
Twyford said building pre-fabricated homes could help overcome the latter problem and the Government had already been approached by international and domestic companies offering that service. It would begin the expressions of interest process soon.
"Off-site manufacturing is significantly more productive so more homes can be built from the available workforce. It will help address some of the constraints the construction sector faces until we can train enough local builders."
He told The Nation it would take a few years to ramp up the pre-fab industry to that scale but once it was done expected a "substantial proportion" of the houses to be built that way. He hoped that would be more than half of the 10,000 to 12,000 houses a year needed.
He said working with the private sector on it could also see large-scale factories established in New Zealand to undertake the work, creating jobs. The guarantee of work to build thousands of houses each year would be attractive enough for those investors and companies to invest in the facilities needed.
Some KiwiBuild projects are under way in Papakura and the Government is also proposing a major development on the Unitec site in Mt Albert.
The Government is also planning to introduce special visas to get overseas construction workers over for the scheme.
National's housing spokeswoman Judith Collins said while pre-fab housing was a good idea it was another admission that Twyford could not deliver on the scheme and would rely on the private sector to bail him out.
She said Twyford was already relying on buying from private developments which were already in the pipeline to plump up his KiwiBuild numbers.
The Real Estate Institute has said the speed at which prefabs can be built would result in a 10 per cent lift in construction industry productivity.
However, last month Deacon Holdings managing director Grant Porteous said pre-fab housing was not the quick solution many believed.
Deacon Holdings is the master franchise holder for traditional builders GJ Gardner.
Porteous told the Herald modular housing took more time to build from conception in the factory to on-site completion and presenting it as the solution was misleading and gave false hope.