Are Modular Homes a Good Investment in South Australia?

Could Modular Homes Really Be The Solution to SA’s Housing Shortage?

It’s no secret we’re in the middle of a serious housing crunch here in South Australia.

While things are easing slightly, prices are still up, demand is strong and buyers - especially first-home buyers - are facing some really tough decisions.

And over the past few months, mostly thanks to the media hype, we’ve noticed more and more people asking the same question:

“What’s the deal with modular homes? Are they actually a good option, or just a short-term fix?”

It’s a fair question.

With the SA Government launching a pilot program to roll out modular homes in regional areas, and local company BoxMod building fully kitted-out homes overseas and assembling them here in Adelaide, modular housing is suddenly back in the spotlight.

Recent industry research also shows that 73% of South Australians support expanding the use of prefab homes.

But for many of the buyers and investors we speak with, it still feels like a bit of an unknown.

So we thought it was worth unpacking properly - because while modular homes aren’t the right solution for everyone, they do offer some exciting opportunities if you approach them with a clear plan (and a good deal of strategy!).

Why modular housing is gaining traction in SA

There’s a reason modular homes are getting attention right now.

With building costs still high and long delays frustrating many buyers, the idea of a quality home that can be delivered, assembled and moved into in a matter of weeks is understandably appealing.

BoxMod, for example, is currently piloting six modular homes for regional areas - but they’re being assembled right here in Adelaide.

These homes are fully finished (not just a shell) and come with kitchen appliances, tiling, flooring, cabinetry - the lot.

Starting from under $300,000 (excluding land), they’re clearly targeting the affordability end of the market.

And while the current rollout is government-backed, the ripple effect is already being felt.

More buyers are now open to the idea of modular as a faster, less stressful alternative to building from scratch - especially if it means getting into a suburb they thought was out of reach.

So what exactly is a modular home?

Let’s clear up the biggest misconception first.

Modular homes aren’t the same as tiny homes, granny flats, transportables or kit homes, and they’re definitely not a step down from a ‘real’ house.

A modular home is a permanent home that’s built off-site in sections (or modules) in a factory, then transported and installed on site.

The modules can include complete rooms - with flooring, cabinetry, windows, wiring and even kitchen appliances already in place - before they’re craned onto the block and joined together.

The result? A permanent, fully functional home that can be just as stylish and high-quality as a traditional build – it’s just assembled differently.

They’re not new.

But advances in design, materials and sustainability are making them more appealing than ever.

The newer generation of modular homes are beautifully finished, energy efficient and surprisingly spacious.

You can choose from different layouts, colours, finishes and façades to suit your style or the surrounding area.

They also meet Australian building codes and come fully compliant for council approvals, lending and resale - just like any other home.

They’re popping up in some pretty impressive places too - some custom builds even sit in coastal or high-end suburbs where you wouldn’t pick them at all!

Are modular homes a good investment?

That’s the million-dollar question (or, in this case, the sub-$650K question!).

It depends on your goals - but the short answer? They absolutely can be.

However, like anything in property, it depends on how you approach it.

From a purely numbers point of view, modular homes offer a much lower build cost compared to traditional homes.

With price tags starting at sub-$300K (excluding land), that means buyers and investors can keep their overall build cost down - and that could open the door to suburbs they might’ve previously thought were out of reach.

And thanks to their far quicker build time, it also provides more flexibility for investors who are looking to add a new home to their portfolio without the 18-month wait.

But while the structure is modular, the land isn’t.

And that matters - because when it comes to capital gain, it’s the land that typically appreciates over time.

Which is why we agree with the idea that a modular home in the right location will almost always outperform a solid traditional build in the wrong one.

If you pick the right block in a growth suburb, you’re not just getting a more affordable way in - you’re giving yourself the potential for long-term capital growth, just like any other well-considered property purchase.

And if you’re an investor, there’s the added bonus of being able to rent out a brand new, low-maintenance home in an area with strong demand - without the long lead times of a traditional build.

At the end of the day, it comes down to doing your homework - or better still, working with a trusted real estate agent who knows the local market inside out.

Addressing the mental roadblocks (because there are a few!)

In reality, there’s still plenty of hesitation around modular housing. Here are a few things we often hear (and what we’d say in response):

· “Will a modular home feel cheap or temporary?”

Not at all. The newer designs are sleek, energy efficient and incredibly well finished. Think of them as a home built differently - not a compromise.

· “Will I be able to sell my modular home later?”

Yes - if you’ve chosen a good location, with the right zoning and infrastructure nearby. Again, the land does a lot of the heavy lifting here.

· “Can I even get a loan for a modular home?”

You’ll need to speak to a broker or bank about your specific situation, but many lenders are open to funding modular builds. It’s not as niche as it used to be.

· “Do I have to manage it all myself?”

Definitely not. That’s where a good real estate agent comes in. We help you identify suitable land, navigate zoning considerations, and make sure you're not missing something that could limit your options later on. Plus, if you’re leasing it out, a modular home becomes just like any other rental property that can be managed by a Property Manager.

· “Isn’t a modular home just a glorified granny flat?”

Nope. These are full-sized, standalone homes - often with multiple bedrooms, proper kitchens and open-plan living. Very different to a second dwelling out the back.

Why the land still matters (and it always will!)

As we’ve already discussed, this is the bit that often gets missed in the modular housing conversation – but it’s worth going over in more detail.

No matter how your home is built, where it’s built still plays a huge role in its value and future appeal.

The land and its location is still the driver of long-term value.

No matter what kind of home you put on it – or whether you’re living in it or renting it out - your land will always be the foundation of your property's potential.

That’s why working with someone who understands the Adelaide market can make such a difference.

You want land that’s well-connected, zoned appropriately and that offers growth potential.

This applies whether you’re building a traditional home or a modular one.

So if you’re thinking about going down this path, here are a few things we always recommend looking for in a block:

What makes a ‘good’ piece of land for modular homes?

Zoning: Make sure it’s zoned for residential use and allows for modular-style construction. Some areas may require planning approvals for non-traditional builds.
Access: The site must be accessible to large trucks and cranes - modular sections are transported in big pieces.
Soil quality & slope: Flat, stable land will make installation simpler and cheaper. Sloped or reactive soil may need extra work (and might attract extra cost).
Surrounding infrastructure: Proximity to shops, schools, transport and services all increase long-term value - and make any home easier to rent or sell down the line.
Suburb demand: Look at how homes in the area are performing. Are prices rising? Is there buyer or tenant interest? Growth suburbs and gentrifying areas are ideal.
Services connected: Confirm power, sewer, water and NBN are already connected or easily accessible - these aren’t always a given.

The great thing is, you don’t have to figure this out on your own.

Helping clients match the right block to their goal is something we genuinely enjoy doing - so if you’re unsure about how to find an ideal block of land, always feel comfortable reaching out to us.

So who are modular homes best suited to?

Modular homes aren’t just for one type of buyer.

In fact, one of the most appealing things about them is how versatile they are - whether you’re stepping into the market for the first time, adding to your portfolio or simply looking for a low-maintenance home that doesn’t compromise on comfort.

Here’s where we’re seeing the most interest locally:

First-home buyers who want to get into the market but who’ve been priced out of established homes in their ideal suburbs.
Investors looking for quick turnaround builds, lower build and maintenance costs to achieve higher yield, good tenant appeal and long-term growth.
Downsizers who don’t want to move into a unit or retirement village but are chasing a smaller footprint, lower maintenance and a modern design that can still accommodate lifestyle features like a spare bedroom for the grandkids or an open-plan living space.
People rebuilding a new home on the same block, but want to knock down and rebuild quickly without stressing over the unpredictability of traditional builders.
Anyone who’s worried about building delays, suffering through half-finished builds or budget blowouts.

Final thoughts

Modular homes are something we’ve been watching closely, and we genuinely think it’s one of the most interesting (and exciting) shifts happening in the local Adelaide market right now.

That’s because, for the right buyer, modular homes can be a practical, modern way to build in a market that’s becoming harder to break into, and they’re a real, evolving part of the property mix that we feel is here to stay.

In our view, they’re becoming a legitimate - and in some cases, the smartest - path forward for a growing number of people across Adelaide.

But as with any property decision, success comes down to making savvy choices.

Having the right advice from the start makes all the difference - not just in how smooth the process is, but in how well your decisions hold up five or ten years down the track.

So if you’re exploring a modular home as an option, or want help finding the right block to make it work, we’d love to have that conversation!

References:

AMPLIFY Reserch: www.amplifyaus.org
SA Government: www.premier.sa.gov.au/media-releases/news-items/prefab-housing-project-launched-ahead-of-industry-roundtable
RenewalSA: renewalsa.sa.gov.au/news/modular-homes-could-solve-regional-woes

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DISCLAIMER: All recommendations made by We Connect Property are general in nature and not to be relied upon as legal or financial advice. To ensure accuracy, we always strongly recommend seeking independent, professional advice tailored to your specific situation before making any investment or financial decisions.