With costs front-of-mind for buyers, data now shows the minimum 7-star natHERS energy ratings will pay dividends for new homeowners.

Australia’s increased energy efficiency ratings for new homes are steadily rolling out nationwide.

First announced in 2022, the National Construction Code (NCC) changed the minimum energy rating from 6 to 7 stars when using the Nationwide House Energy Rating Scheme (NatHERS) for new homes.

Historically, Australian homes have fallen short in terms of proper insulation for our varied and often extreme climate, making them uncomfortable to live in and expensive to heat up or cool down.

The new 7-star standard promises to ensure better energy efficiency, while making significant strides in Australia’s effort to transition to net-zero emissions by 2050.

NatHERS currently provides a rating out of 10 stars and considers the home’s design and construction materials including walls, insulation, windows and roofs.

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The minimum 7-star energy rating aims to enhance energy efficiency for new homes, while advancing Australia's goal of achieving net-zero emissions by 2050, and it may not be as expensive to implement as first thought. Picture: Getty

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But there are concerns among some builders that the new standards will result in significant financial burden. The Housing Industry Association (HIA) claimed the extra costs for building a new home in New South Wales, for example, are estimated to fall between $20,000 and $40,000.

But new data from The Australian Glass and Window Association (AGWA) challenges these estimates, with upgrades costing an average of $4300.

Australians place a high value on energy efficiency when selecting their homes. The PropTrack Origin Australian Home Energy Report found 77% of prospective buyers considered energy efficiency ratings important in their search, as it helps reduce their power bills.

Data from NatHERS and the CSIRO also found that over 75% of new homes in New South Wales are now rated above 7 stars.

With the new standard promising to boost comfort and sustainability in new homes, where exactly can homeowners see cost savings?  

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Build cost increase – fact or fiction?

As most states adapt to the new standards, builders and industry bodies across Australia recognise the increase in upfront costs.

The Australian Glass and Window Association (AGWA) recently reported that costs have raised by an average of $4300 per home: the averages are $2972 in Brisbane, $5905 in Melbourne, $4262 in Perth and $4105 in western Sydney.

Green Building Council Australia chief executive officer, Davina Rooney, noted that these costs will be offset through energy bill savings of $326 per year.

With an average outlay of $4300, over a 30-year mortgage, the extra build cost is $143 per year. But considering the annual energy savings are $326, homeowners come out in front, saving a minimum net $183 off annual energy bills.

Optimising the orientation of the home, insulation and high-performance windows are cost-effective ways to maximise efficiency and make your property a comfortable place to live as our climate changes. Picture: Getty

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The average figures are based on the worst orientation of each house and what glazing is required for those orientations. In other words, it looks at the worst-case scenario from an energy perspective.

This is based on a new report - 7.0 Star cost upgrade analysis - which examined more than 50,000 NatHERS simulations. The analysis compared homes with minimal window areas, typical in market volume builds, to those with larger window areas, common in architectural designs.

If your home is a custom or architectural build with many large windows, these figures will be higher.

Unlocking long-term savings and comfort living

Green Building Council Australia notes upfront costs will be offset through energy bill savings of $326 per year.

"These upfront costs are a smart investment. Homeowners will not only see reduced energy bills but also enjoy more comfortable living environments,” Ms Rooney said.

“The improved energy efficiency of these homes is expected to reduce carbon emissions by 18-28%, making this investment beneficial for both the planet and the household budget.”

Further research has shown that additional construction costs to meet the new standards are expected to be minimal, when compared to energy cost savings that can be achieved over the lifetime of a new home and an average 30-year mortgage.

How to use design to reduce costs

By incorporating smart design early in the new home build process, achieving a 7-star rating can be accomplished without major additional costs.

The most important way to do this is by optimising the orientation of the home, as facing one direction can have a huge impact on your home's energy efficiency.

Ideal orientation will differ depending on your climate and in which part of the country you're based, but for many Australian homes, north-facing orientations are prized.

"Because the path of the sun in Australia is to the north, orientation is usually about whether the living areas of your home face north. North-facing rooms receive sun for the longest period of the day in winter and are easily shaded by the eaves of the roof in summer," explained yourhome.gov.au.

Over 75% of new homes in NSW are now rated above the new minimum 7-star energy rating. Picture: Getty

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Taking advantage of opportunities to heat the home passively in winter while shading it in summer could also be a key factor.  

This can be done through improved ceiling, wall or under-floor insulation, but high-performance windows are a must when wanting to better insulate the home from heat loss in winter and heat gain in summer.

“While improvements to glazing are necessary, higher-performing windows significantly reduce a home’s energy consumption and running costs, while also enhancing the comfort and health of residents,” AGWA executive director and chief executive officer Clinton Skeoch said.

“With the right planning and advice, new homeowners can incorporate design features and material choices that make a big difference to their home’s rating outcome, without breaking the bank.”

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