Baugruppen. It might sound like a mouthful but this German word could be the answer to Australia’s housing affordability woes — or at least a new way to look at the problem.

If you can’t afford a freestanding house in Australia’s capital cities, the choices for an apartment alternative are generally expensive and limited. Many of the units available are targeted to investors and are often said to be of poor quality.

Literally translating to “building group”, baugruppen in effect cuts out developers from developments. The idea is that a group of interested purchasers come together and collectively fund their own multi-unit housing project. They are often helped or led through the process by architects, and they get a say in what their resulting homes look like. Generally, these homes have a focus on quality, sustainability and shared community facilities.

“At the moment, middle to modest income earners cannot buy a decent apartment because all the stock that’s produced is generally for investors,” says RMIT housing lecturer Andrea Sharam. “But there’s now a lot of interest in different models, particularly from younger people.”

Her research has shown that apartment buyers can save up to 30 per cent through such “deliberative development” (the opposite of speculative development).

The model that took off in Germany (predominantly in Berlin) has made its way to Australia, with a handful of baugruppen-esque projects popping up throughout the country.

Two recent examples have come out of Western Australia. One is a co-housing project that was launched by the council in Fremantle, the other is an innovative collaboration between the WA government’s land development agency, LandCorp, and the University of Western Australia. Located in White Gum Valley near Fremantle, that project is targeting a 15 per cent saving for buyers.

It’s basically like paying wholesale prices on homes, rather than the marked-up retail price.

“[A group] is fundamentally assisted to become their own developer, and in doing that they save themselves the developer’s margin and the marketing costs,” says project leader Geoffrey London, Professor of Architecture at UWA.

Mr London, who was also the former Victorian government architect, says the main aims of the project are to provide more affordable higher density options, provide more sustainable unit designs, establish a community, explore shared amenities and improve the diversity and quality of designs available.

There are a few things holding the model back from taking off completely in Australia, according to Dr Sharam. One of those is the significant financing barriers, especially the high level of equity required to obtain debt financing from the banks.

Dr Sharam says this will require a whole shift in thinking from conventional development lending, understanding that buyers in baugruppen projects are not at the same risk of settlement defaults.

“It’s a whole different ball game,” she says. “Even if one buyer falls out for some reason, say they go through a divorce and can’t go through with the purchase, then you have a waiting list; a group of people waiting in the wings to come in.”

That has been true of popular baugruppen-style developments in Melbourne, such as the Nightingale series, where a waiting list was more than 800 strong.

“One of the other really big things holding us back is that prospective purchasers are failing to understand it’s up to them to initiate it,” she said.

Gerard Coutts, a project management consultant with an interest in bringing baugruppen to Australia, is on a tour of Europe studying co-housing models. He says there’s much Australia can learn from them.

“I think there is a compelling movement [towards baugruppen models] as land supply dwindles and people are pushed outwards,” Mr Coutts says. “Older people, who wish to stay in areas familiar to them, this may be the type of solution to that assists.”