The homes we live in will increasingly be constructed off-site as investors and developers strive to balance spiralling costs with net-zero ambitions.

That is the view of property finance specialist MSP Capital, which addressed record inflation coupled with tighter energy efficiency standards.

Experts at the lender predict a growing role for modular assembly methods as a cheaper, greener alternative to on-site construction.

Modular homes are built in sections, often in climate-controlled indoor facilities, and transported to their location where they are positioned on pre-set foundations.

Advocates often hail the shorter build times, cost-efficiency and avoidance of delays caused by on-site weather risks.

There are also environmental benefits through less site waste and scrap, and greater scope for green innovation at the design stage on aspects such as insulation, water use and storage, and lighting and heating.

The forecast comes as the global market for modular homes is seeing dramatic growth. Industry sources quote annual growth rates of up to 7% with market size predicted to increase from around £95 billion a year in 2018 to more than £131 billion by 2026.

Lee Merrifield, underwriting and credit manager at MSP Capital, says: “We are in an economic climate with inflation hitting a 40-year high and the price of construction materials skyrocketing.”

“That’s because of supply chain impacts caused by the war in Ukraine, sanctions against Russia, the lingering impact of the pandemic, and Brexit.”

“At the same time, investors, prospective housing occupants and government are all demanding that homes are built with environmental sustainability in mind because of the climate emergency.”

Merrifield says this combination of factors has created a ‘perfect opportunity’ to look closely at modular, energy-efficient approaches to housebuilding.

He goes on to say: “If developers can shorten the build period and deliver an environmentally friendly product with low energy costs, then individual projects will be more attractive to both investors and customers.”

“More widely, the sector as a whole can play its part in not only meeting government energy efficiency standards but in demonstrating genuine innovation on the path to net-zero.”