Building a new home offers a great opportunity for buyers to get exactly what they want by customising a house to their needs. It’s also a great time to optimise a home for energy savings.
Even though most home builders would love to future-proof their new house by making it as energy efficient as possible, it’s also true that many of these features add money to the cost of construction.
Here, we break down all the ways a newly-built home can maximise energy efficiency, as well as the best bang-for-buck options, and provide insight into how to prioritise between the many choices a home builder must make.
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From the home's orientation, to its heating and cooling systems and other appliances, there are a lot of choices to make when building a new house that will impact its energy efficiency. Image: Metricon/realestate.com.au
Types of home energy ratings
When you dive into the world of energy efficiency, you’re likely to quickly encounter acronyms and phrases that can seem a bit confusing.
Chief among these are the (multiple) rating systems that exist to inform the energy efficiency of a home.
The most popular rating systems that you will hear about are NatHERS, the Whole of Home score, and Green Star.
What do they all mean?
NatHERS
NatHERS stands for nationwide house energy rating scheme and it was first introduced in 1993. But it wasn’t until 2003 that The Australian Building Codes Board introduced energy efficiency measures for houses into the Building Code of Australia (BCA), which is part of the National Construction Code.
NatHERS is an indication of a building’s thermal performance rating from one to 10. A building with a one star rating is “basically a tent,” according to Dr Nicola Willand, who is an associate professor at RMIT's School of Property, Construction and Project Management.
A 10-star building requires no heating or cooling at all to stay at a comfortable.
Since 2022, the National Construction Code has required all new homes meet a 7-star rating, which means that they are well-insulated but will require heating and cooling throughout the year.
The Whole of Home score
While NatHERS rates the shell of a home for its thermal performance, in 2022 the National Construction Code added the new Whole of Home rating, which was developed by NatHERS, and allows for a more holistic rating that captures appliances within the home.
This means that elements such as the home’s heating, cooling and hot water systems, pool and spa equipment, lighting and plug-in appliances are considered, as well as the home’s ability to generate and store solar electricity.
The Whole of Home score is rated out of 100, with new homes expected to reach at least a rating of 60 according to the latest edition of the National Construction Code.
Green Star
Founded by Green Building Council of Australia in 2003, Green Star certifies new buildings with a rating system between one and six. It’s an opt-in program, with builders and developers generally looking to attain four (best practice) five (indication of Australian excellence) or six (world leadership) stars.
The Green Star system is not only an indication of energy efficiency in a building but also rates a home for its use of carbon in construction and operations, its relationship with the surrounding environment and impact on the community.
What are some elements that home builders should consider if they care about sustainability, energy efficiency and saving on their bills?
There are lots of features that can contribute to making your home more energy efficient. Some are easy to add on later, while others must be planned into the build. Here are the major elements that new home builders should consider if they're looking to build a future-forward home.
The orientation of the home
Starting from scratch has a lot of benefits, including being able to optimise the orientation of your home. This is the first thing that home builders will want to consider for energy efficiency.
There are environmental elements you will want to take into account when considering aspect depending on where you live, but ultimately, as Davina Rooney, CEO of the Green Building Council of Australia noted, it’s north-facing that you’re looking for.
A north-facing home will allow you to heat your home with summer sun in the winter months.
“You can get huge benefits out of having a fabulous north-facing home in terms of energy efficiency. With this orientation, you can use a lot more passive design.”
But as Dr Willand noted, it’s also important to be aware of how the home’s orientation impacts it year-round, and choose window design and shading that will complement your home’s orientation.
“It's a fine balance between the size of windows, shading and insulation,” she said.
"If you have a very well insulated home, and then big panes of glass facing the sun that are shaded where the sun comes in, sunlight is then turned into infrared radiation that can't escape and you get a glass house effect with an overheated home. So really, if you go to those higher star (NatHERS) ratings, you also need to be very mindful to keep the summer sun out.”
Skipping the gas hookup
Going all-electric with your new home and foregoing gas appliances is a good way to contribute to the environment, save money, and prioritise the health of you and your family.
Electric appliances generally use less energy to run than gas, making them more energy efficient. In addition, they don’t release CO2 into the environment during use, as gas does when burning.
As a result, homes without gas are considered healthier, with Asthma Australia indicating that children who live in a gas home have a 24% greater chance of being diagnosed with asthma at some point in life.
Already, Victoria and the ACT have moved to ban gas hookups in new builds, as have several NSW local councils.
Electric cooktops, such as induction hotplates, are becoming more popular due to their energy efficiency and sleek appearance. Image: Unsplash
The size of your house
The bigger your house, the more energy it will take to run – especially for heating and cooling.
It’s been widely reported that Australia builds the biggest houses of any country in the world, and that’s backed up by data commissioned by CommSec from the Australian Bureau of Statistics.
Since the 1950s, the average house size has increased more than twofold, reaching a size of 236 square metres in 2020.
At the same time, the average number of people living in those homes has shrunk to 2.5.
Dr Willand has noted that while over time our needs for our homes have changed, we are still including features that might be outdated, such as a more formal living room, often in the front of the house, meant specifically for entertaining.
At the same time, we’ve come to add elements and rooms that never used to be part of a standard build, such as a media room.
Dr Willand encouraged new home builders to understand that infrequently used rooms can't just be forgotten about. The home's residents will have to pay for this space in perpetuity due to the cost of heating and cooling.
“We should ask the question, do we really need this?” Dr Willand said.
“If you look at other countries like in Europe, for example, they are building smaller homes, but still very well-designed and functional homes.”
A heat pump for hot water
A heat pump hot water system is an appliance that will cost a little more at the outset, but that delivers immediate and noticeable savings.
While they set you back more than an electric storage or gas heater – costing roughly twice as much depending on the appliance – they are found to use roughly 75% less energy than an electric storage water heater.
Ms Rooney named heat pumps as “one of the best bang for buck” appliances that home builders can opt for.
Because of this efficiency, in a high-use household such as a four-person family, the payback period is expected to range from five to ten years.
Double glazing
Windows are one of the biggest sites of heating and cooling loss in a home. Double glazed windows provide significantly better insulation than single glazed.
This is also an option that is much easier to do during construction, and significantly harder to retrofit.
If your budget stretches to double glazing, putting higher-quality windows in during the building phase will be much cheaper than trying to replace the windows with double glazed if you decide you need them down the track.
Solar panels
Solar panels (or photovoltaic panels) are another great bang-for-buck feature delivering immediate savings.
The upfront cost of solar panels will begin to be chipped away immediately by savings on your energy bills – in some cases almost eliminating energy costs, depending on the size of your array and general use.
A solar installer will be able to walk you through the estimated payback period based on your family’s energy use, but it’s commonly estimated that a correctly sized system should pay for itself within three to six years.
The upfront cost of solar delivers immediate savings on energy bills. Image: Getty
Rainwater tank
Rainwater tanks have become one of the most ubiquitous sustainability features of Australian homes, with one in four houses relying on a rainwater tank in some capacity.
Depending on how they are installed, rainwater tanks can be used to flush toilets, wash clothes, water gardens and wash cars.
If a rainwater tank is properly installed and plumbed into your home, Sydney Water estimates it could save up to 40% of an average household’s drinking water supply. That equates to $200 a year off of an average family’s water bills.
Roof colour and material
This is another choice that’s best made during building as it’s hard and costly to change down the track.
For Australian environments it is generally recommended to choose a light-coloured roof, which will reflect solar radiation and reduce heat transfer.
But for home builders who have their hearts set on a dark roof, there are new materials that that can help reflect radiation on darker coloured roofs, such as certain Colourbond products.
Efficient appliances
As Dr Willand explained, a NatHERS star rating “doesn't automatically give you the cost rating, rather it is just the heating and cooling demand. Then you have to choose the heating and cooling appliance”.
In other words, you could build a home with a good thermal envelope, but if your appliances are not efficient, you will still feel it on your bills.
“What you want to have is a very efficient appliance, which are also rated. The more stars the better,” Dr Willand said.
Highly rated insulation
Insulation should be thought of as “a puffer jacket” for your home, according to Dr. Willand. This is the key to how long your home retains the temperature that you’re trying to achieve.
Insulation is also rated, but this time by thermal resistance or “R-value”. The higher the R-value of your insulation, the more effective it will be.
AVJennings' Stellar Collection of home designs targets a minimum 8 star NatHERS rating, which is helped by well-insulated walls. Image: realestate.com.au
Gap sealing
When you’re heating and cooling your home, it’s important to find any weak places in your thermal envelope. These commonly occur around doors and windows, joins between the flooring and walls, and other junctions.
Small gaps might not seem like a big deal, but a thermal camera will show just how much they are impacting your ability to maintain a specific temperature.
There are lots of different methods for eliminating and mitigating gaps in the home depending on where they occur. A good-old-fashioned silicon sealant will do the job for gaps that don’t have a moving component.
What’s the best bang for buck?
There are two things to think about when prioritising energy efficiency in a new home – what features go the furthest and what is more expensive to do later.
Dr Willand and Ms Rooney both agree that orientation is the cheapest and best first thing to consider in terms of building an energy-efficient house. This comes down to site selection and design, so it should be something consumers considers right from the start.
Insulation is another choice that is cheap to do at the start and very hard to change. So is selecting your hot water system, though homeowners will have the opportunity to replace this every ten to fifteen years.
Solar energy is also a big cost-saver, and Ms Rooney encouraged home builders to consider this one carefully.
"Obviously putting renewables on top is always a winner, but if you are budget constrained, this is also something that you can add on easily down the track. However, a lot of the green mortgages target solar. So in fact you might be able to stretch your budget a little further by aligning those savings."
Qualifying for a green loan
This is a little-understood but important facet of how you can save money by building an energy-efficient house.
A green home loan (sometimes called a green mortgage or a sustainable home loan) is available from some Australian lenders who offer lower rates when the property meets certain energy efficiency standards.
To qualify for a green home loan, you will usually need to show documentation of the home’s NatHERS or Whole of Home score.
While rates will vary, some lenders with green loan products are offering their sustainable loan products at 2% to 3% lower than their standard mortgage products.
How do I find a builder or site that’s right for a sustainable home?
Ms Rooney said that if you care about having an energy-efficient home, it’s key that you are upfront about this with your builder and developer. Their response to your questions will be key in understanding what kind of service they will provide.
“Who you work with and their experience in delivering sustainability builds is very important. A very clear and simple metric to ask about, if it's a new dwelling for both apartments and for homes, is what the NatHERS rating is, what the what the energy rating is. That’s where you should start”.
Developers like AVJennings have created a range of home designs that exceed the minimum standards and target an 8-star NatHERS rating, due largely to the fact that they’re responding to customer demand.
“Our buyers consistently tell us that energy efficiency is a top priority – helping them lower energy bills, reduce their environmental impact, and enjoy a more comfortable home,” said Kylie Mannix, head of marketing at AVJennings.
Called the “Stellar Collection,” Ms Mannix explained that the developer used a range of strategies to increase the energy efficiency of these designs, including an innovative walling system as well as double-glazed windows.
“This approach has enabled us to achieve energy ratings of up to 9.4 which we are very pleased with for our customers and the environment, considering a 10-star rating theoretically means no heating or cooling is required,” she noted.
The Stellar Collection is currently available in a number of the developer’s communities, including Aspect, and Lyndarum North in Victoria; Evergreen and Rosella Rise in NSW; and Riverton in Qld.
Stockland, a developer that has been a longterm supporting parter of the Green Building Council, has also introduced more standard energy efficiency measures in its communities.
For example, at Stockland Oak Place in Victoria, townhomes are designed to make the most of the natural light and heat of the sun, with solar panels included as standard. All townhomes are intended to have either a rainwater tank or a solar-boosted hot water service, double glazing on all windows, and cool roofs painted with a light colour to reflect solar radiation and reduce heat transfer.
And volume builder Metricon is well equipped to answer consumers' questions about building an energy-efficient home. The builder has developed a proprietary system called Geosite to provide data-driven advice on optimising home designs for climate, site orientation, and energy performance.
What are the overall savings?
The Green Building Council estimates that building a house with a Green Star Rating of four or above will typically add $38-$84 per month, to incorporate energy-efficient inclusions into your home.
But these inclusions are immediately expected to begin paying for themselves, with residents of Green Star homes typically paying $90-$140 less in energy bills per month compared to the average household.
The real savings come from green loans as well as expected appreciation of your energy-efficient home.
On a 30-year loan of $700,000 for a $900,000 home, for example, a green loan would be expected to save the borrower roughly $40,000 over the lifetime of the loan.
Energy-efficient homes are also expected to appreciate more than standard homes. However, because these features are still so new, it’s hard to get a long-term view of how much value they add.
Ms Mannix noted that data from the UK indicates that energy-efficient homes achieve a 14% premium. She expects to see a similar trend “due to upcoming mandatory energy efficiency reporting in Australia,” which will happen in 2027.
A 2024 survey conducted by PropTrack found that 74% of respondents would pay more for a solar-powered home, with 12% saying they could see this feature adding as much as 5% to the value of the home.
Moreover, 61% said they would pay more for a property that came equipped with a home battery; 39% said having an EV charger would add value, and 33% said that they thought an all-electric home was worth paying more for.
Are you interested in finding a builder or a house and land package? Check out our dedicated New Homes section.