Modular homes are on the rise as homeowners priced out of the market see it as a cheaper and more adaptable new build.

Thanks to the growing popularity of modular building, a factory in Upper Hutt is churning them out at near capacity.

Matrix Homes is working on 22 homes for a residential "village" in the Wellington suburb of Tawa that will go up in late September. The company ships homes all over New Zealand on the back of a truck for homeowners looking for a quick and easy way to build.

Jeremy Loader, 35, first came across the company when he was Googling modular homes a few years ago.

Loader said he was desperately trying to think "outside the box" to find housing he could afford from Nelson to Foxton.

"I've been to open homes right up the Kapiti Coast, and I'm just priced right out of the market."

The cost of the houses start at $139,000 for a one-bedroom unit.

Loader said the $160,000 option for a three-bedroom was another way of looking at new homes, especially when it came to making additions later.

"You can add stuff or join them up in different orientations, and you can add stuff later on ... clip it together like a jigsaw puzzle, or pop parts out as you please."

He also said the option gave better lending options from banks and more leverage from KiwiSaver.

Matrix Homes managing director Sean Murrie said residential demand has been steady, but a recent foray into the commercial market for a seven-storey development on Victoria St in Wellington had been "poo-pooed" by engineers.

The indoor assembly line employs 25 workers.

Construction manager Scott Jones said despite the benefit of staying dry, there has been quite a high turnover of staff working there.

Jones said the monotony of an assembly line could have something to do with why the construction workers leave.

In spite of this, he said the pace of churning out houses has been increasing.

The factory builds about six modules a month, but Jones hopes to get the number up to 10.

Completed houses are loaded onto the back of a truck and driven or ferried across New Zealand, where they are bolted onto a foundation.

"We're effectively putting them through an earthquake to get where they're going, so we know they're quite durable," Jones said.

Business development manager Simon Wood said the company is getting more involved in the commercial buildings and hoped to eventually split the warehouse into two lines, one for residential orders and one for commercial buildings.

The company is in the early stages of partnering with developers for two multi-storey apartment buildings in Auckland and a seven-storey building in Wellington in Tory Street.

He said a commercial property using the residential modules could be completed by the end of next year.

The thing that attracts developers was speed and price, Wood said.

"We can be 10 to 15 per cent cheaper on average, but the speed could save someone half-a-million dollars in time."

Residential modules come off the assembly line even faster.

"If someone ordered today, they'd have a new home by Christmas," Wood said.

The 22 houses destined for the Tawa village have all been pre-sold, with a little less than half going to private investors.

Murrie said: "The only thing that's slowing that process down is the current administrative and regulatory environment."

"Even if the land is a designated special housing areas, Councils can still refuse building consents if they think the area's infrastructure might become overloaded and the council is reluctant to invest in such infrastructure.

"All the obstacles we've encountered over the past year could be overcome if councils and the Government worked together to get more land zoned for housing and applied a common-sense approach to protect the property owner," Murrie said.