Tasmania could lead the way in providing modular and pre-fabricated houses, the Property Council says.
Council Tasmanian president Peter Scott told a parliamentary inquiry on housing affordability that a lack of tradespeople was hampering the building of more housing stock.
"We have more housing approvals, than (housing) starts and the reason is there are not enough tradies," Mr Scott said.
"Modularity and pre-fabrication is coming whether we like it or not.
"It's here to stay and it will massively increase over time."
Mr Scott told day two of the inquiry hearing that the advantage of modular homes was they needed reduced labor and could be produced up to three months quicker.
"Tasmania's innovative construction industry should be embracing that technology," he said.
"We have the capacity to build that industry here and become specialists in it.
"We should not have to rely on interstate or international providers to provide these products."
Mr Scott and the council's executive director Brian Wightman cautioned that while the Tasmanian economy was going well it could hit a trough.
"We're conscious of some potential deflationary things that could occur," Mr Scott said.
"If the GST redistribution occurs it could gut the economy so that robustness is somewhat fragile.
"If we don't achieve population growth, or we get negative population growth, that is the key. An external world event could potentially take all that robustness and positivity out of the economy."
Mr Scott believed there was a role for the private sector in providing social housing but it needed incentives to provide a return to shareholders.