The Minns Government wants to move modular building beyond detached homes. For manufacturers and smaller innovators, the question is whether the money is worth the co-contribution.
The New South Wales Government has opened applications for two grant programs aimed at getting modern construction methods into taller, denser housing.
The funding is modest in dollar terms. The intent behind it is not.
From 29 June, manufacturers and small-to-medium businesses can apply for a share of nearly $4 million across two streams. Both sit under the Minns Government’s broader plan to change how homes get built in NSW, with Modern Methods of Construction (MMC) at the centre of it.
For builders watching the modular space, this is another signal that the groundwork being laid over the past year is starting to turn into actual money on the table.
What is on offer
There are two separate programs, and they target different ends of the industry.
The first is the Housing Innovation in Construction Fund, worth $2 million. It offers grants of between $20,000 and $150,000 to commercially established manufacturers to assess and adapt MMC for use in mid and high-rise housing.
The catch is the co-contribution. Funding is provided on a matched basis, with applicants required to contribute at least 50 per cent of total project costs. A $150,000 grant therefore assumes a project worth at least $300,000.
The money is pointed at a specific gap. Most modular and prefabricated work in Australia has been detached housing and low-rise. Getting those systems certified and engineered for mid and high-rise involves feasibility studies and compliance assessments that many manufacturers have not yet funded. This grant is designed to cover part of that cost.
The second program is the Housing Innovation Network Grants Program. It offers competitive grants of up to $250,000 to help small-to-medium enterprises collaborate and pilot innovative housing products such as digital tools, building materials and service innovations.
The structure here is different. Rather than feasibility work, this stream funds real-world pilots run in partnership with Homes NSW, tested in actual public housing settings. The Government has committed up to $1.8 million to the program, with funded pilots expected to run for up to 12 months between late 2026 and 2027.
So one stream helps established players move up the building scale. The other helps smaller, newer operators prove their products in a live environment.
Why the timing matters
These grants do not exist in isolation. They are the latest piece of a much larger reform agenda.
NSW has spent the past year reshaping how it treats modular and prefabricated construction. The Building Bill 2026, currently before Parliament, will for the first time formally recognise prefabricated buildings in law and integrate MMC into the approvals system. That matters because for years, modular and prefabricated construction sat in a regulatory grey area where councils and certifiers handled it inconsistently.
Alongside the legislation, the 2026-27 NSW Budget commits $32.3 million over four years to modernise the building approvals system, integrate it into the NSW Planning Portal and pilot AI tools to speed up licence application processing. Part of that, $1.6 million, goes toward a new regulatory framework and a national certification system for MMC.
The Government has also flagged a bigger play: a two-stage competitive tender, opening in coming weeks, inviting local and international MMC operators to partner on a world-class facility to produce prefabricated components and modular housing at scale.
Put together, the picture is consistent. Legislation to give modular legal standing. A faster approvals system. A certification pathway. A state-backed factory. And now, grants to help the existing industry catch up to all of it.
The supply pressure driving it
The reason behind the push is straightforward. NSW is not building enough homes.
The state is working toward a federal housing target of 377,000 additional homes by the end of 2029, around 75,000 homes each year. While housing approvals have improved, NSW remains behind the pace needed to meet that target.
Modular construction is one of the levers the Government is pulling to close the gap. The productivity argument has been made repeatedly. The Commonwealth Productivity Commission has estimated that modular and prefabricated methods can cut construction costs by up to 20 per cent, while industry bodies cite build-time reductions of up to 50 per cent. Whether those figures hold at scale in Australian conditions is still being tested.
It is worth keeping the scale in perspective. Modular and prefabricated construction currently accounts for around five per cent of total construction activity in Australia, well behind countries like Sweden where prefabricated elements feature in the large majority of homes. The headroom is significant. So is the distance still to travel.
“NSW is not building enough homes. Modular is one of the levers the Government is pulling to close the gap.”
What it means for builders
For most builders, these grants are not directly relevant. They are aimed at manufacturers and product innovators, not at builders running site-based jobs.
But the direction of travel is relevant to everyone in the sector.
If the Government succeeds in moving modular into mid and high-rise, and in standing up a state-backed factory producing components at scale, the supply chain around residential construction changes. Builders who understand modular systems, who can work with prefabricated components, and who can integrate factory-built elements into their delivery will be positioned for the work that follows.
For manufacturers and suppliers, the more immediate question is whether the grants are worth pursuing. The Construction Fund’s 50 per cent co-contribution means the program suits businesses that already had feasibility or compliance work on their roadmap and can bring matched capital. It is support, not a free ride.
The Network Grants Program may be the more accessible entry point for smaller operators, given it funds pilots rather than requiring a dollar-for-dollar match, and it comes with access to Homes NSW environments to test in.
Industry response to the broader package has been measured but positive. The Australian Constructors Association welcomed the investment as a necessary step to lift productivity, noting that while housing is the immediate priority, the bigger opportunity is applying these approaches across the full construction pipeline. Others have been careful to frame modular as one tool among many. Community Housing Industry Association NSW chief executive Luke Achterstraat described modular housing as a valuable addition to the policy mix rather than a standalone solution.
The bottom line
NSW has spent a year building the scaffolding around modern construction. Legislation, approvals reform, certification, and a planned factory. These grants are the part where the existing industry gets some help climbing onto it.
The amounts are small relative to the problem. Nearly $4 million will not, on its own, solve a shortfall measured in tens of thousands of homes a year. But the grants are not really about the dollars. They are about signalling that modular is now part of how NSW intends to build, and giving the businesses already in the space a reason to invest further.
THE GOOD BUILDER TAKE
Modular is no longer a fringe conversation. It is becoming part of the mainstream, and the businesses that get familiar with it now will be the ones ready when it scales.For builders, the grants themselves may not apply. The shift they signal does.
Applications for both programs opened on 29 June. Details for the Housing Innovation in Construction Fund are at nsw.gov.au/hic, and the Housing Innovation Network Grants Program at nsw.gov.au/hin.
Frequently Asked Questions
What are the two NSW housing innovation grants?
The Housing Innovation in Construction Fund offers $20,000 to $150,000 to established manufacturers to adapt modern construction methods for mid and high-rise housing, on a 50 per cent co-contribution basis. The Housing Innovation Network Grants Program offers up to $250,000 to small-to-medium businesses to pilot innovative housing products with Homes NSW. Together they total nearly $4 million.
When do the grants open and how do I apply?
Both programs opened on 29 June 2026. Applications and eligibility details are at nsw.gov.au/hic for the Construction Fund and nsw.gov.au/hin for the Network Grants Program.
What are Modern Methods of Construction (MMC)?
MMC is a broad term covering off-site and modular building, prefabrication, panelised systems, robotic fabrication and repeatable design. The aim is to manufacture more of a building in controlled factory conditions and assemble it on site, which can reduce build times and improve quality control.
Do I need to contribute my own money to get a grant?
For the Housing Innovation in Construction Fund, yes. Applicants must contribute at least 50 per cent of total project costs. The Network Grants Program funds pilots without requiring a dollar-for-dollar match, making it more accessible for smaller operators.
Are these grants relevant to a builder running standard site-based jobs?
Not directly. They target manufacturers and product innovators. But they form part of a broader NSW push, including the Building Bill 2026 and a planned state-backed modular factory, that is moving modular construction toward the mainstream. Builders who understand these systems will be better positioned as the sector scales.
This article is intended for general information purposes only and does not constitute legal, financial, or professional advice. Laws, regulations, and industry requirements vary by state and territory and change over time. Builders and trades professionals should seek independent advice relevant to their specific circumstances before making business, legal, or financial decisions.
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