Dealing with perceptions of prefabrication

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Prefabrication is often seen as the answer to reducing construction costs and improving productivity in New Zealand, but our experience shows there are some hurdles to overcome first.

Beacon’s experience with off-site construction of a Christchurch show home, the HIVE High Performance House, followed the house right through the marketing and sales process.  And that’s where things got interesting.

Ironically, our experience confirmed that building in the factory brings many benefits.  The build was faster because it was uninterrupted by bad weather (no muddy site for us!).  Contractors enjoyed a safer work environment, especially when installing cladding and roof.  The more controlled environment of a factory made it easier to manage inwards goods, and also easier to sort and recycle/reuse waste.  And we were thrilled with the speed and productivity of the build - 10 weeks in the factory for a house complete with roof, windows, cladding and lining! 

However, constructing the house was the easy part! 

The sales process was an eye opener and it raises a number of problems that prefabrication needs to overcome if it is to become the answer to New Zealand’s housing affordability and supply challenges.

 

Barrier - buyer expectations and convenants

What rapidly became apparent was that prefabricated houses have to compete with “normal” houses which are sold as a combined home and land package.  Although some buyers had land and were looking for a house, they wanted a “ready to move in” price including foundations, services and all consents.  Not only was this particularly difficult in Christchurch where most sites require specific foundation design, it also suggests that any prefabrication business needs to offer a wrap-around service to provide the full equivalent package.  You can’t just sell the house and expect the new buyer to sort out the moving, consent and services details.

Another barrier we came up against was the prevalence of covenants in subdivision dictating building size, design and value.  In Christchurch where subdivisions are proliferating we had a number of interested buyers with sections governed by covenants which specifically excluded prefabricated homes.  It comes down to market perception (more on that later) but it was very clear that prefabricated houses are not welcome in subdivisions! 

This explains why most current providers of prefabricated houses target rural properties, baches, minor units and worker housing - rather than the new homes sector.

 

Barrier - house size

Prefabrication also needs to find a way to meet the market’s fixation with house size.  Developers will claim that they are responding to the market, although at the same time covenants are requiring houses of a certain size.  3-4 bedrooms, 2/3 bathrooms, triple car garage - that’s the norm. 

In our case we were trialling off-site construction of the entire house.  This limited the design to a 2 bedroom, 100m2 house which was as big as could be built in the factory and easily transported.  The implication of this is that off-site construction of larger houses needs to take a modular approach, more like that trialled in our Hobsonville duplex which built walls and pods off-site and put them together on-site.

 

Barrier - finance

Finance is another major barrier for prefabricated housing.  The security for a loan is a piece of land - not a house.  As we discovered when financing the High Performance House onto its HIVE site, no bank will lend on a mortgage until the house is on the final site. In addition, no bank will lend on a mortgage without a valuation but valuers are reluctant to value a house without a piece of land associated with it!

This means buyers have to pay cash or borrow against another house if they want to shift a prefabricated house onto a site - a major barrier for many buyers.  This reinforces the bach/second house/low cost granny flat view of prefabrication.

 

Barrier - perceptions of ‘prefab’

Finally, feedback from buyers, particularly in the run up to the auction of the house, was indicative of another challenge for prefabrication.  Call a house prefabricated and buyers immediately assumed it was “cheap”, “a kitset” and “a step above a portacom” (too many people with bad memories of old prefab classrooms!). Our real estate agent reported that buyers expected to pay only about half what a “normal” house costs.

This was despite the HIVE High Performance House being very well appointed with quality finishings and jam-packed with good performance features which would substantially reduce running costs in the future.  Put that in a “normal” house and I’d hazard a guess that you’d pay a premium for it.

So above all else, we have to turn around the market perception of prefabrication.  It’s going to take a concerted effort - building quality is not enough, we have to make it easier for buyers AND change their thinking.  For our part, here at Beacon, we’re ditching the word “prefabrication”.  We think it has too many bad associations.  In the future we’re going to be talking off-site construction!

 


  • 03-Sep-2014 (Conference paper PRES/48)

    Improving the Performance of Steel-Framed Houses (PDF 4MB)

    Nick Collins and Lois Easton

    Presentation to the Building a Better New Zealand Conference 2014.  Covers learnings from the off-site construction and later sale of the HIVE High Performance House.


Hobsonville sale sign