As zero-carbon-emission plans take shape around the world, we’re also starting to see greener, cleaner alternatives to the traditionally fossil fuelled home build. The search is now on for eco-friendly houses that are durable and can survive a market shift.

In 2021, Australia was ranked as the world’s biggest greenhouse gas contributor, but most homes still retain high levels of embedded carbon. Eco-friendly houses are unfortunately still uncommon, but one green solution, in particular, is making a comeback - flat pack homes!

In short, flat pack or prefab homes are built off-site (or prefabricated) in sections. All components, like flooring, roofing or walls, are then transported and assembled on the home owners property.

They can be fully or partially prefabricated, and either carbon negative or carbon neutral. 

Flat pack homes offer many benefits that are likely to attract more investors in the future - especially as more countries adopt zero-emission policies.

Let’s dive deeper into the construction and uses of flat pack homes, and weigh the pros and cons of investing in one, particularly as a property investor.

Apart from the building materials and climate cost (which we talk about further on), the most obvious difference between these types of housing is the construction process.

Unlike traditional homes that are completely built on-site, flat pack houses consist of components and units that are individually made in a factory.

They are then packed into specially designed racks or flat packs and transported to the site on a semi-trailer.

The prefabricated units can be assembled either by the home owner or the manufacturing company.

Prefab homes may very well be the future of affordable, sustainable housing. 

These game-changing creations offer huge financial and environmental benefits. They are also being flagged as a solution to help Australia reach its net zero target by 2050.

It’s prudent to note that flat pack homes come with a few downsides which we will discuss further on. These negatives don’t eclipse the benefits for homeowners, but they may, however, throw a few hiccups in the way of investors.

The housing market is shifting towards greener options and away from the less climate-friendly traditional homes. Investing in flat pack homes right now may turn a sizable profit when demand rises.

Kit Home:

The starting price of a kit home from a single manufacturer can cost as little as the below figures, but keep in mind, strained material supply chains will continue to have an upward impact on prices:

•  $114,000 for an 85m 2 bedroom, 1 bathroom home
•  $148,000 for a 152m 2 bedroom, 1 bathroom home
•  $219,000 for a 205m 3 bedroom, 2 bathroom home with a study

These costs only cover the manufacture of certain components of the house. You may have to hire another company to assemble the parts at extra cost.

The assembly/erection costs can vary widely and are largely dependent on:

• The location
• Condition of the site (ex: soil, bush fire, wind)
• Assembler rates
• Size of the house
  
  

Modular Home:

The cost of a modular home covers everything from component manufacture to delivery and assembly on-site.

These prices start from:

•  $100,000 to $2,000,000 for an environmentally sound home with energy-saving features.
•   $3,000 to $5,000 per square metre for a custom home, based on passive design principles and flexible facilities.

Budget homes:

If affordability is your priority and you have limited finances, budget flat packs can cost as little as $20,000 to $35,000. 

These homes sit on a steel frame and the panels slide into place during assembly - a lot like a Lego set.


Durapanel flat packs:

Another cost-effective option is the Durapanel Flat Pack. Similar in concept to a studio apartment, this home costs from $45,000.

Components are built from a material called Durapanel, which consists of resin and compressed straw.

All flat pack homes are built with a focus on reducing carbon emissions - but the exact ways they do this differs with each manufacturer. 

In short, flat pack houses are designed to produce fewer emissions, have less embodied carbon in their build, and be either carbon neutral or carbon negative.

New technology has also boosted the green credentials of flat packs even higher. Reusable framing systems like XFrame use 30% less material than the usual timber wall framing.

Equipped with energy saving features, flat pack homes will help cut down your utility bills in the long run – a definite selling point! 

Flat pack homes in Australia have low energy requirements and high energy standards. Some even cut down on energy usage by 70% when compared with traditional housing.

Some modular homes even have split systems and new inverter tech that allow for huge savings on heating and cooling costs. In addition, companies are already exploring better ways of achieving energy efficiency through design.

One of these projects is the ‘Modular Net Zero Carbon House’. Developed in Brisbane, it uses a passive solar design with raised roofs and sliding elements for natural ventilation, a thermal chimney solar-collector area and a double-glazed timber window system.

From interior fittings to the architecture and design, how your flat pack house looks and functions is completely up to you (and your budget!). Start off by choosing a basic model as your foundation base, then customise everything else. 

If you plan on reselling or using your flat pack house as a source of income, try integrating newer lifestyle trends in the design. By adding customisation to meet the general requirements of your target buyers, you could increase your chances of a sale.

The cheaper the investment, the greater the profit. It’s estimated that kit homes cost 10 to 25% less than traditional homes, even after paying for permits and land.

Faster construction times mean less labour and material costs as well as factory usage. While a normal home may take over a year to build, flat pack homes will only take a few months.

Here are a few factors to consider that can make construction quicker:

• Having the factory close to the building site cuts down on transportation time
  
• If the home is built in a central industrial location, suppliers will be within close range
  
• Better lighting, quality equipment and sheltered work sites at factories avoid weather delays and secure a quick delivery

The controlled environment of a factory enables flat packs to be built to a higher standard. They are more durable than traditional homes and are of a higher quality.

• Lumber is cut more precisely, allowing units to fit together more tightly
  
• Key wood-framing pieces are pre-drilled and joined with screws, ensuring they withstand more pressure
  
• Having a designer as part of the supervisory team means less risk of misread plans, miscommunication or taking shortcuts
  
  

Although these are minute details, they are very important to a home’s ultimate durability. A wood frame component that’s slightly too small may give way during an earthquake, compromising the structure of the entire home.

High-quality materials and attention to detail are guaranteed to capture a buyer’s interest, particularly if they know the value of the materials used.

Renting out factory floor space and hiring specific expert builders can be costly. However, if the build is completed in a short period of time, you won’t be spending as much as an on-site build.

Before you go ahead with any building work in Australia, you will need to buy the land that your flat pack home will finally rest on, as well as get a planning and building permit for the project.

You will also need to carry out soil testing and make sure you have the permits and facilities to hook your home up to electricity, water and sewers.  

Any transportable homes or prefabricated buildings need to meet the correct road widths and heights. This can be a bit of a hassle since homes larger than the dimension limits would have to be split into manageable modules to fit on the truck.

Arranging cash through banks for a prefab home may not be that easy. Banks generally don’t lend unless the home is attached to the site. This means you may have to pay the contractors out-of-pocket until your loan comes through.

Transportation costs may spike up if the land you’re building the home on is in a remote area or not easily accessible. 

The higher the demand for the land, the more you’ll have to shell out. If you’re looking for big savings, you may have to settle for a home outside of your preferred areas.

Flatpacks of yesteryear were very similar to the old mobile homes - and were not very high quality! This has left a tough stain on the reputation of flat packs and some buyers, particularly older generations, are still wary of them.

Even with vastly improved technology and excellent quality as well as sustainability benefits, it may take some time for them to be more widely accepted.

However, the current Australian market conditions does seem to be leaning in favour of the flatpack! 

With property rates skyrocketing across Australia and a global shift towards greener housing options, the need for affordable, sustainable housing grows by the day. It is likely that flat pack homes may very well become the ‘homes of the future’ much sooner than expected. 

All in all, flat packs are great housing options for home buyers, but can also guarantee a tidy profit for investors who play their cards right.

A proper presentation of how flat pack homes are more durable and sustainable than traditional homes could debunk profit-killing myths. 

Adding trendy (but affordable) highlights, such as eco-friendly and energy-saving features, could shoot up the offers for the house while reducing expenses.

Flat pack homes could be a good investment - if executed right.  So map out a plan, crunch a few numbers and build your next source of income!

Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you. You should seek tax advice from your accountant, specific to your situation.