Affordable modular homes: a potential solution to Australia’s housing crisis
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US-based start-up Capsul is poised to revolutionise the Australian housing market with its innovative modular homes, offering a potentially affordable solution to the country’s ongoing housing crisis. Spearheaded by entrepreneur Ali Zaidi, Capsul is introducing modular “designer pods” priced between $80,000 and $150,000. These homes are built off-site and ready for occupancy in just 30 to 40 days, presenting a cost-effective and efficient alternative for homebuyers.
Ali Zaidi, the driving force behind Capsul, emphasises that the initiative is more than just a housing solution. “Capsul isn’t just a housing company, it’s a revolution,” he stated. “In 30 to 40 days we can build a space that changes a life, powers a business or builds a community.” Each home is equipped with a kitchen, bathroom, flooring, and solar-ready wiring, designed to cater to a diverse clientele, including young Australians, downsizers, and small investors.
The concept has already attracted significant interest, particularly among first-home buyers, retirees, and Airbnb hosts. Zaidi has ambitious plans for eco-resorts and “Capsul Villages” across regional Australia, highlighting the adaptability and potential of these modular homes. “The old dream doesn’t work for the new generation,” Zaidi asserted. “For a fraction of the cost, Capsul buyers get a modern, beautifully designed space built in weeks, not years.”
Despite the promise of these modular homes as a quick fix for Australia’s housing affordability crisis, some experts remain sceptical. Melbourne buyers’ advocate and mortgage broker Madeleine Roberts acknowledges the potential of the concept but points out its limitations. “The tiny home idea isn’t new,” Roberts noted. “You can make a container look great, but if it’s sitting on cheap land with no jobs or infrastructure, people aren’t going to live there.”
Roberts suggests that the homes could serve as effective granny flats or secondary dwellings, especially with new planning regulations allowing for faster approvals. “If the government backed families to add one of these in their backyard, it could really help,” she said. “They’re cheap, quick and practical — that’s where they make sense.” However, Roberts also highlights the persistent issue of land costs. “Even if the build is $150,000, land on Melbourne’s fringes starts around $700,000,” she explained. “You’re still up around $850,000. That’s not affordable housing, it’s just a smaller house with the same price problem.”
Another challenge facing these modular homes is how they are perceived by financial institutions. Banks often view them as depreciating assets, which complicates resale and leasing options. “They’re not like a house you can easily resell, without building approval you can’t lease them, and insurers won’t touch them,” Roberts added.
Despite these concerns, mortgage broker Rebecca Stella sees potential for modular homes in specific markets. “If they’re designed well and meet building codes, they could work in coastal areas like Torquay or Lorne,” Stella said. “People want flexibility — a space for grandparents or guests — and these pods could fill that gap.” Stella believes that the appeal of modular designs aligns with a growing trend towards minimalist living. “It’s not going to fix the market overnight, but it’s part of the shift towards smaller, smarter living,” she commented. “People are realising they don’t need a big block to have a good life.”
While modular homes may not be the panacea for Australia’s housing crisis, they do reflect a broader demand for innovative and adaptable housing solutions. As Stella concluded, “While the modular homes won’t end the housing crisis, what this idea reflects is the growing demand for faster, more flexible housing and a generation searching for a different way to live.”
Capsul’s entry into the Australian market with its modular homes represents a significant step towards addressing the housing affordability issue, offering a glimpse into the future of housing. As the nation grapples with the complexities of the housing crisis, innovative solutions like Capsul’s modular homes could play a crucial role in shaping the future of affordable housing in Australia.