Homes could be built faster, cheaper and with less waste following the federal government's promise to cut red tape holding back modular construction.
In addition, banks will work with government to make it easier to finance the build of prefabricated and modular homes.
Australia's construction industry has been slow to embrace digital technologies, automation and prefabrication - which involves building components offsite in a factory and assembling onsite.
New Productivity Commission modelling highlights the benefits of modernisation, with widespread adoption expected to slash construction costs by up to 20 per cent and cut timelines in half.
Treasurer Jim Chalmers and Industry Minister Ed Husic announced new measures on Friday following an Investment Roundtable.
Leaders from banks, super funds and investment firms joined policymakers at the Canberra event.
"The issue that we have is building homes quickly," Mr Husic told reporters on Friday.
"Prefab and modular can do it in a fraction of the time of a conventional build with less cost and less waste."
A national voluntary certification system would be developed to support prefab and modular home builds, in recognition that the National Construction Code is geared towards traditional methods.
The government will also convene a meeting with the Australian Banking Association and other industry groups next week to establish more suitable financial products.
Lenders have been reluctant to fund offsite construction as they are accustomed to releasing funds to builders as dwellings come together onsite.
With housing affordability and shortages shaping up as a key election issue, Labor is pulling a number of levers to bring on new supply.
Under changes to the Future Fund investment mandate on Thursday, boosting housing supply has been added as one of three new national priority areas for the sovereign wealth fund.
While the government insists consideration of the national priority areas will never come at the expense of maximising returns, the opposition has accused Labor of "raiding Australia's nest egg" for its "pet projects".
Shadow Treasurer Angus Taylor has vowed to ditch the additional priority areas for the Future Fund if the coalition wins the federal election due by May.
Future Fund chair Greg Combet said the changes to the investment mandate would not compromise its independence nor cause it to lose money.
"All that the new investment mandate asks us to do is to have regard to these areas of national priority that the government has articulated and which still align with strategies to investment by the fund itself," he told reporters in Canberra on Friday.
"We plan on making money for Australian taxpayers."
