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The Federal Government has committed $39.3 million to an open-source prefabricated housing system trial to accelerate residential construction and lower costs.

Developed in collaboration with Building 4.0 CRC and Homes NSW, the initiative uses a standardised "kit of parts" model to build homes faster.

The model will allow home builders to use pre-fabricated elements manufactured offsite, such as walls, kitchens and bathrooms, to reduce on-site delays.

Monash University Associate Professor and director of the Future Building Initiative, Duncan Maxwell, said the initiative has the potential to accelerate housing delivery, reduce costs, strengthen domestic manufacturing capability, and facilitate scalable modern methods of construction.

“Over the longer term, this approach may fundamentally reshape the design, procurement and delivery of housing across Australia,” he said.

Monash University has been working with Building 4.0 CRC to advance modern methods of construction through the development of platform-based building approaches, digital integration, interoperable building systems, and collaborative research aimed at addressing Australia’s housing challenge.

Housing Minister Clare O'Neil said most homes use the same basic components - walls, windows, roofs, bathrooms, kitchens.

"So instead of designing everything from scratch every single time, we can standardise some parts of the process and make construction more efficient,” she said.

In other countries, like Sweden, around 80 per cent of detached homes are built using prefabricated parts, compared to just five per cent in Australia.