The Australian housing market is facing a major crisis, with half a million people moving here every year and housing supply struggling to keep up. But now, there’s a potential solution that could change everything—Commonwealth Bank (CBA) has announced that they will now provide loans for prefabricated (prefab) homes. 

What Does This Mean for Homebuyers? 

Prefab homes are built off-site in a factory and then transported to a designated land location. This process makes construction faster, cheaper and more efficient than traditional home building. These homes can range between $150,000 to $300,000, making them an affordable alternative for many Australians struggling with skyrocketing property prices. 

Before this policy change, banks were reluctant to finance prefab homes because the structure was built off-site, which made it difficult for lenders to secure their investment. Now, CBA has found a way to make it work, which could revolutionise the property market. 

Why Prefab Homes Make Financial Sense

One of the biggest advantages of prefab homes is cost savings. The construction costs can be almost half the price of building a traditional home. For example: 

• A 105-square-metre prefab home costs around $230,000, which translates to $2,200 per square metre. 

• Traditional homes, in comparison, often cost $4,000 to $5,000 per square metre. 

This means prefab homes could be the key to making homeownership more accessible while maintaining quality. 

Can You Build a Prefab Home on Your Existing Land? 

Yes! Many homeowners with larger blocks of land are now considering prefab homes as a granny flat or secondary dwelling to generate rental income. 

For example, if you own a house in Holland Park worth $1.2 million, adding a $250,000 prefab granny flat could increase the total value to $1.45 million. Under CBA’s new policy, banks may now offer loans based on the “as if complete” valuation, making it easier for homeowners to finance the build. 

Investment Potential: A Smart Move? 

Prefab homes are not just for homeowners—they also offer a solid investment opportunity. A two-bedroom, one-bath prefab home in Brisbane could rent for $500 to $550 per week. That’s a yearly rental income of around $26,000 on a $250,000 investment—a 10% return, which is much higher than most bank savings rates. 

Investors looking for passive income and long-term growth may find prefab homes a smart and cost-effective solution to enter the rental market. 

What You Need to Know Before Building 

While the financing options have improved, there are still a few things to keep in mind: 

• Council Approvals – Regulations vary by location and some councils may have restrictions on prefab dwellings.
• Rental Rules – Previously, granny flats could only be rented to family members, but new state legislation allows them to be rented to unrelated tenants.
• Loan Requirements – Banks will assess the total property value and ensure that the loan does not exceed 70% of the final valuation. 

Final Thoughts: A New Era for Australian Housing? 

Commonwealth Bank’s decision to finance prefab homes could be a game-changer for homebuyers and investors alike. Whether you’re looking to build an affordable home, add a rental unit, or make a smart investment, this policy opens up new opportunities in the market. 

If you’re interested in learning more about prefab homes and whether you qualify for financing, now is the time to speak to a mortgage expert. With the right approach, you could be on your way to owning a home faster—and for a fraction of the cost.