The Brisbane house by architects Vokes and Peters along with Blok Modular has won the Houses award for the best new home under 200 square metres.
The recognition is exciting for the growing modular design industry, Blok architect Daniel Burnett told AAP.
"It's an important part of shaping the future of the industry and making uncompromising and inexpensive architecture in a factory," he said.
The owners had lived on the sloping block in the suburb of Stafford Heights for about 10 years, and plans for a knock-down-rebuild project with a regular architect had proved too expensive, despite attempts to cut costs.
They then decided to try a cheaper modular design, and Burnett says they are pleased with the results.
"They're absolutely stoked about it," he told AAP.
"They've been champions of the process from the start ... they really enjoyed the process and they love the outcome."
About half of the site has been made into a walled garden, and the other half is a single storey pavilion, with city views on one side and garden views on the other.
The house was designed in four sections, with each finished offsite in a factory including tiles, paint and even windows.
The modules were delivered by truck and installed in a single day.
Burnett believes a common misconception that modular housing is poor quality comes from earlier uses for prefab design, which was mostly for mining camps or cheap kit homes.
That's slowly changing as the public's trust increases, he says, something the award should help with.
"We do beautiful architectural houses built in a factory ... there is no compromise," he said.
Modular building is roughly twice as fast as a regular building process, with most of Blok's projects constructed inside six months.
Part of this is because most of the trade work is done inside a factory, meaning preparatory work onsite can be carried out at the same time.
There are also improvements in waste reduction and impacts on neighbours, along with considerably more certainty about cost, according to Burnett.
Burnett sees modular design as a solution to housing affordability problems, and hopes to introduce robotics into the building process.
The size of the prefab market in Australia is not currently clear, according to the co-founder of industry body prefabAUS, Damien Crough.
Current estimates put prefab at about five per cent of the construction market, but that's expected to grow to 15 per cent within the next three years.
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