Modular Building vs. Traditional Building

Updated: Nov 12, 2019

Honest Comparison: Traditional vs Modular – What’s a better option for you?

1) Price:

In most cases, traditional building is cheaper, no doubt about it.

I mean the majority of modular builders in Australia charge $3000-$5000 per square metre. That’s a lot of money. Keep in mind though the major brands are probably turning over close to $100M + per year… there are evidently people buying these homes that with this insane price tag.

Traditional building, I mean it does really vary state-to-state but it’s around $1600-1650 per square metre for standard builder finishes. So, nothing fancy, just regular type design and inclusions.

But, to be honest, if you were to spec up a traditional house to the level of the luxury modular homes, you’d still be paying less in most cases.

In regard to Dwellie we’re placed somewhere in the middle of the market. We want to create a balance between a high-quality product and a fair price to our clients. And we come in at approximately $2000-$2200 per square metre turnkey as of the 29th of OCT 2019… it could change.

But overall, as far as price is concerned, you have to give this one to traditional building – its generally cheaper, unless you’re building multiple houses, or the block is slopey or difficult or outside the metropolitan area. We’ll give this one to them, if you’re on a tight budget like under $200 thousand for the build, traditional build is usually a better fit.

2) Construction time

Well look I think most people know that this is the biggest advantage of modular building compared to traditional. The speed of construction and getting the project completed and ready for sale or living is literally half the time.

Typically, a residential building project takes approximately 9-12 months to build in traditional construction methods. Obviously, this depends on the location of the site, the type of building - apartments, townhouses, weather conditions, site conditions…

With modular building, it's consistently the same timeframes regardless of these circumstances. 8-12 weeks to build off-site and around 4-8-weeks to finish off and install on-site. Totalling approximately 4-6 months all up.

It’s a great option if you’re an investor looking to flip quickly and stop paying finance, or lease as soon as possible and start earning revenue. It’s also great if you just want to move in to your new home quickly without any delays or headaches.

3) Specifications and finishes:

If you compare the basic inclusions of a modular home and a traditionally built home by a volume builder or even a mid-tier builder, its game over for traditional. Obviously, you’re paying more as discussed earlier but you do get what you pay for, just like life in general.

The standard of finishes modular builders use are of a lot higher quality. For example, we use double glazed windows, with option to go up to triple, 40m stone benches and 2 pac lacquer finishes to all cabinets.

In comparison, standard inclusion for traditional would be something like – powder coated aluminium windows, 20mm stone benches, and laminate finishes son cabinets.

So I guess the point is to request a basic inclusions list when you’re shopping around and ask yourself how do you want feel in your new home? What’s the value long-term? It is a big decision. In this case, modular gets the cherries.

4) Financing:

Straight up traditional homes are clear favourite in this case, its way easier to get finance for a traditional home because that’s been the norm for however long and everyone knows how that process works. You don’t need to necessarily get creative.

This is one of the hurdles I think that is preventing modular and prefab from going from about 5% of total construction in Australia, to 20%.

The issue is that most banks are still stuck in a conventional way of lending. And this can cause projects to fall through.

So typically, with modular homes the lender will release funds of up to 80% of land value initially, with no further funds available until the modules are on site and at lock up stage. Then a bank valuer will come out and say great the total value of this construction (land + property) is $1M and from there, a standard building progress draw applies. That pat is Easy. Once the modules are on site – we’re golden.

But, their lies the catch 22. Modular builders need to be paid in stages and every company has different structures. So let’s say you’re total project is $350,000.00.

You’ve got $200,000 in supply and manufacture costs, and the remaining $150,000 is building, site works, installation and finishing off once the modules are delivered.

With Dwellie, we need 30% of supply to begin manufacture, in this case that’s 60 grand. Once the home is completed and you’ve walked through it, you love it and it’s ready for delivery, we need the next 30% another 60-grand.

The final 40% is to be paid 30-days after it has arrived on-site. Which is what we’ve had to be flexible in to get these jobs over the line, as most modular builders want 100% upon delivery.

Still, unless your land value or savings can cover this initial 6-figure expense of $120,000.00 you may have to look at other avenues to get this over the line.

And we can even look into taking a business loan on your behalf if you’re an individual to cover one of the stages until its on-site and if you’re a developer or business we can introduce straight to our lender so you can get the direct rates from them, but they are only business to business lenders.

5) Aesthetic:

What build can you get the look you’re after with? What look or style of architecture is sexier?

I mean this is something that is completely personal… you can see the grand mansion aesthetic, or sort of Victorian look, if you prefer that over something more modern, than traditional is probably the preference in this case.

If you like the look of modular designs with the cool floor to ceiling windows, lots of different direction and clever use of space, then perhaps modular homes are are better fit for your tastes.


Final Score: 3-2 (Greg’s opinions)

At Dwellie we price in both traditional and Modular and empower you to pick the best option. If there is anything you’d like me to discuss in the next video let me know via e-mail.

Like that video? There's another honest comparison where we talk about the best modular builders other than ourselves! See Top 5 Modular Builder in Australia (Excluding Dwellie)

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