3D Printed Homes Will Crush Construction Costs and Inflate Land Prices

Cycles, Trends & Forecasts subscribers would have heard me preach many times that advances in technology feed directly into land prices.

This is something completely missed in the mainstream — it’s never mentioned.

The large economic institutions are still taking bets on when house prices will tank based on shifts in the cash rate.

They simply cannot see the bigger picture that the technological boom will sink into the price of land — leading us to peak in 2026.

The connection between technology and the land cycle formed the base of Henry George’s 1879 magnum opus, Progress and Poverty — An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth.

George wanted to know why, as economies progress, does poverty increase?

Why doesn’t the opposite happen?

Why doesn’t technology provide us with more time and leisure, and less need to work and toil?

The answer is of course that land prices absorb the gains of innovation.

Fred Harrison calls this ‘The Law of Absorb’.

And as land prices increase — the split between the haves and have-nots broadens further.

There are many examples we can use to demonstrate.

It’s commonly observed in areas close to transport innovation.

Businesses that could have benefited from the improved connectivity face higher costs for establishing their operations near the hubs.

The same can be said of new innovations that lower the price of construction.

We saw it in the 1950s — some 70 years ago.

William Levitt — nicknamed ‘The King of Suburbia’ and ‘Inventor of the Suburb’ — used mass-production techniques to construct large developments of houses, eponymously named ‘Levittowns’.

They were sold for less than $10,000 — all equipped with modern facilities and within an easy car commute of work zones.

Many other relatively inexpensive suburban developments soon appeared throughout the country.

The assembly-line approach enabled workers to churn out houses at an incredible pace.

It jump-started the suburbanisation of the US, dramatically changed the way homebuilders built, and altered the expectations of homebuyers.

To keep down lumber costs, the Levitts bought their own forests and sawmills.

They purchased appliances direct from manufacturers, and even made their own nails.

The first two-bedroom cookie-cutter houses they produced were a mere $7,500 — allowing a profit of $1000 per house.

Once the technology was widely adopted and the available land sites built out, the price of land absorbed the savings and the cycle continued its upward run into the 1970s collapse.

Similar disruption within the construction industry is evolving right now.

The innovation is 3D printing.

The idea is not new.

It’s been around since the early 1980s.

3D printing of items such as shoe designs, furniture, wax castings, amputee limbs, jewellery, tools, tripods, gift and toys is common.

Automotive and aviation industries use 3D printers to make parts.

But to use it for the mass production of houses is another level altogether.

To date, progress has been slow.

At least, it was prior to COVID hitting.

Now there is an urgency not seen since Levitt created suburbia to meet demand from tens of thousands returning from War.

The challenge is getting a prototype that is viable for mass production.

The other is complying with local building regulations that are not designed to accommodate new designs outside of the rectangular boxes we currently live in.

If you’re not aware, 3D printed houses have been likened to flowerpots, or ’big rocks’.

They are made via concrete being dripped layer upon layer out of the printer.

Think about icing a large cake, and you get the idea.

Here’s an example.

It’s not the most beautiful property you’ll come across, but many different designs have popped up throughout the world — from the US, and Canada, to the Netherlands.

Dubai wants to 3D-print a quarter of its new buildings by 2030.

In the US, massive machines in Austin, Texas have been squeezing out 100 three-and-four-bedroom homes in the first major housing development to be 3D-printed on site.

In Germany, leading formwork and scaffolding firm PERI broke ground last year with the first-ever 3D-printed home to become fully certified under a national Government’s building regulations.

They have also designed the largest 3D-printed apartment block in Europe.

Take a look.

The building has 380 square metres of living space, divided into five apartments across three levels.

This is probably the closest we have to a prototype that can be mass produced.

They went one step further than other 3D printing start-ups by employing a range of skilled workers to integrate services within the structural design itself.

PERI’s head of 3D construction printing, Fabian Meyer-Brötz commented:

‘This integration of other trades has had a huge impact,

‘We are saving a lot of labour in other trades because in the buildings we’re executing there’s not going to be a single slot that has to be cut; nobody’s going to have to drill a hole for a power outlet.’

That means that upon completion, days of labour are saved onsite.

You can only imagine how much this is going to slash the cost of construction.

In Melbourne, you need around $450,000 to build a townhouse which takes six–eight months to complete. (And if subdividing, around a year to gain council approval).

A 3D-printed home can be constructed in 72 hours for a third of the cost!

There are already a few companies attempting to do this in Australia. But progress is desperately slow.

Dubbo Mayor, Matthew Dickerson said:

‘Printing started earlier this week and is expected to be completed within a matter of days.

‘This project is on the cutting edge of technology, offering us a chance to see the future of construction as it happens.

‘The printer will fabricate not only the walls but also the internal structure and roof of the building.

‘Traditional construction methods would typically take months or even years to complete, but thanks to this innovative approach, the toilet block is set to be fully operational by the end of next month following a final fit-out.’

If we do manage to break ground here, you must ponder what this would do for the housing market in Australia in the years to the peak of this cycle.

The bottom line here is that whilst you can slash the cost of construction — and utilise renewable resources for building materials — there’s still one thing that is short in available, accessible supply.

Well-located land!

Slash the price of construction, and ‘Law of Absorb’ kicks in.

Effectively leaving more dollars available to bid up the price of prime sites.

It’s these dynamics that keep the cycle rolling — and it has nothing whatsoever to do with the cash rate.

Best Wishes,

Catherine Cashmore,
Editor, Land Cycle Investor