It sounds like a simple solution: lower the standard of housing and get more built. While parts of that argument make sense – such as the recent call from the Green Building Council for smaller, more modest dwellings – the call to drop energy efficiency misses the mark. More so now that Domain has evidence buyers are paying big premiums to get homes that have solar, north orientation and double glazing.
The data that emerged this week to show that home buyers were paying big premiums for energy efficient housing should give pause for thought to people calling for the wind back of housing standards as a solution to the housing crisis.
It sounds so simple, just like the call to drop planning standards: “never mind the quality, look at the price!”
But Australian consumers are now speaking in the language that resonates across all political parties and market factions: money.
They’re paying significant premiums for housing that has energy efficiency built in through it: solar panels, double glazing and north facing orientation.
They want homes that will protect them from heat and cold without costing them a fortune in energy bills and they’re willing to pay more up front for it.
The big welcome news this week from Domain and its chief of research and economics Dr Nicola Powell is that the market has spoken.
The company’s Sustainability in Property Report 2025 finds that energy-efficient homes “are not only fetching premium prices – but are now high on the wish list for buyers across all budgets and regions.
“Australian buyers are increasingly prioritising homes that offer lower energy bills, year-round comfort, and a lighter environmental footprint. The shift is driving a surge in demand for energy-efficient features in both new builds and existing properties.”
Homes with features like solar, double-glazing and passive orientation are not only cutting emissions and running costs, they’re commanding price premiums.
This premium reaches $118,000 over homes not kitted out for energy efficiency.
In areas such as Melbourne’s South Yarra it’s hit a premium of 54.8 per cent and in Kew 34.4 per cent. In remote areas such as Broken Hill where average house prices are still below $300,000 and the annual household income is just over $61,000 the premium hits a massive 75 per cent. (Understandably, it’s very hot there.)
The news is not so astounding; the market has always rewarded higher quality with higher prices.
What’s changed is that consumers are now cottoning on to the difference between empty glitz and proper value. And big developers of big house and tiny land packages can no longer hide behind the excuse that they are only providing what the market wants.
Money speaks the loudest language of all.
There’s an underbelly to this good news though.
Better houses that are more highly valued are being bought by wealthier people. And that’s a big problem for those who are concerned with a just transition. What happens to the people who are not so endowed?”
They get lumped with the poorer quality housing that costs them more to run. Like buying MacDonalds to feed the family because you’re broke; it will cost you more in the long run.
The longer term cost is ignored by sectors of the housing industry, lobbying their local pollies to drop housing standards through the National Construction Code and to just get on with pushing out quantity. Even though the extra cost to deliver is arguably much less than claimed; if we had a viable prefab industry that could scale up consumer housing we might be able to slash the costs to a bare minimum of everything.
Here’s a tiny example of shoddy workmanship we accept in the regular housing market: windows typically aligned with the exterior walls instead of the internal walls. The result is a huge thermal bridge. Or windows made to be deliberately smaller than where they need to be in places because it’s easier and because the builder can plug up the gap with filler. Not a good energy solution.
But to all this, the housing industry power brokers turn a blind eye. They’re interested in the financial viability of their members, not the consumer.
In South Australia, a state ministerial adviser in South Australia told us, never mind the quality, let’s build fast and furious, (barely containing their discomfort at having to say this).
Another advisor from one of the two big housing lobby groups, The Housing Industry Association or Master Builders Australia, said in response to the question of what do low income people do when their houses are freezing: “turn up the heat,” (this time with barely disguised glee).
Hmmm.
There’s big political risk in all this. Especially when combined with the flood losses that just keep coming and the growing inability of the insurance to function in the areas at risk. One resident of Wingham in New South Wales said his family’s insurance had gone from $2500 a year to $28,000 and that a neighbour had been quoted $75,000. The insurance industry says there are 220,000 homes built in the “wrong area”.
If the federal, state and territory governments don’t look at the political risk of even more people who can’t afford resilient housing or resilient locations, maybe they should remember the result of the recent federal election, when Australians demonstrated their fear that we would end up like the America people, horrendously split along economic and political grounds. A chasm of inequality growing ever larger.
Lower standard bearers are winning
But right now, or at least until now, the lobbyists for lower standards are winning. Removing red or green tape will solve the housing crisis, they say. But it wasn’t a problem during the boom and there are a lot of sensible solutions emerging, such as the feds getting seriously back into housing development, with a whole host of benefits that would flow from that.
The building ministers are in the dark but should be the most important
But none of this is visible at the regular meeting of the building ministers, who again recently pledged, hands on heart, to uphold and expand the NCC remit. While their senior ministerial colleagues chuckle and plan to reverse the agreements if the political winds dictate, easily rolling what’s seen as the lowly portfolios their colleagues are forced to accept in order to get a seat at the cabinet table.
In our view the building ministers should take their rightful place next to the stature accorded to attorneys general or treasurers, such is latent political power this cohort will soon wield as climate change digs in.
Watch how the electorate will turn on the still basking Albanese government if it doesn’t seriously grapple with climate resilience through our built environment and climate mitigation.
In fairness there’s a lot of promises and budgeted programs for buildings, but with climate mitigation there’s an almighty early fail, with Murray Watt’s first job as environment minister approving the massive extension Woodside gas project. Note he betrayed nary a look of discomfort or embarrassment that we might have expected from his forebear Tanya Plibersek.
Meanwhile, back to housing.
The call to wind back size and grandeur of houses is a good thing and it’s exciting to see this finally edge out from the likes of Jeremy McLeod & co. It’s a relief to see the move to strip the star out of starchitects and go for less ego driven design that delivers the immensely more seductive and enduring qualities of comfort. Not to mention that magic feel good factor you get when you can look your kids squarely in the eye and are happy to tell them what you do for a living and how.
Well done Green Building Council of Australia for putting smaller more modest housing on the agenda.
Ross Elliott’s Levittown article
Another good move we saw was from Ross Elliott a mover and shaker on the Queensland housing scene with quite a bit of influence in the Brisbane City Council.
Among his ideas for a housing crisis solution that we liked enormously was his call, also, for smaller houses – forget the three car garage and four bathrooms plus rumpus rooms.
Instead in this extensive article he published on his own website, Elliott called for lessons to be learned from the post war housing boom in the US when demand was enormous and supply abysmal.
The hero shot is straight out of 1950s USA with a “young family outside a starter home in Levittown.”
The appetites in those days were smaller, so families happily snapped up modest houses that they later expanded and made more comfortable.
Elliott then goes on to say that along with the size we need to also drop the morass of standards that have crept in over the years.
In Queensland he says the cost of building a house is around $600,000 but needs to be between $300,000 and $400,000 to be affordable for the average family there.
He cites a mass of planning regulations and standards that have bloated the NCC as desire for better outcomes overtook our ability to pay them.
Sounds like common sense, right?
On the size of houses and more modest inclusions the argument is sound.
And of course, rules and regs drive most people nuts no matter what side of the fence they are on. So too taxes, for many people. But each produces a public good it’s hard to live without. The difficulty is sifting the wheat from the chaff.
But there’s another argument to make.
This is not the 1950s. We have a climate crisis that means extreme weather will threaten people’s health and safety, costing the taxpayer more in the long run. We need resilience now, baked in.
We need to learn from The Netherlands how to flood-proof housing. See this video from the Insurance Council of Australia’s Alix Pearce.
And there’s a serious equity issue. In post war America as in Australia we had boundless growth opportunities and economic inequality was shrinking.
We’re not on the same trajectory now. People entering sub quality housing now, whether in terms of energy efficiency or climate disaster prone areas, will likely never be able to pull themselves out of their predicament.
Our system is no longer set up for upward mobility.
For people to move into better safer housing under their own steam we need higher productivity, a prosperous, generous economy and well-funded governments.
We haven’t got that yet.
So let’s build it right from the start but keep the modest bits.
We failed in 2021/2 to get Net Zero adopted into the National Construction Code V2 in favor of 7* energy efficiency. This was a HUGE mistake and that the Housing Industry have successfully lobied to a standstill, disingenuously connecting regulation to housegbuilding rates.
Why do we have regulation? We have it to protect minimum acceptable standards – standards that if you fail at you are breaking the law. So these standards are at the level where failure is a hazard to health and safety or discriminates against say disabled people. So what is THE biggest threat to health and safety of all – well its the potentially existential threat of climate change and that we enforce through regulating net zero emissions. There are utterly compelling (no-brainer) reasons to regulate Net Zero for Housing:
– Net Zero Houses are IMMEDIATELY more affordable for the new house owner, because the energy cost savings are up to 8 times greater than the additional mortgage payments (<2%) for the net zero measures.
– Net Zero is spectacularly easy to do, a net zero house is one with enough rooftop solar to exceed the building's regulated energy loads with no gas connection. The average house needs about 3kW of solar to meet regulated building loads and the average solar install is already 9kW. This contributes to our renewable energy targets and accelerates the uptake of rooftop solar.
– Because Net Zero compliance is sooooo easy, it is much easier and cheaper to prove and verify compliance than any star rated level of energy efficiency compliance – net zero eliminates the falacious argument that regulation is a drag on housebuilding.
– Out to 2050, a net zero mandate accelerates decarbonisation of the housing stock 4 times faster than 7* energy efficiency and it stops adding to the stock of houses that immediately need retrofit if they are to get to net zero.
– It is cheaper and safer to install rooftop solar from new than to retrofit.
– Housebuilders should love this – it reduces regulatory costs and complexity and provides loads of opportunities to sell value-adds – oversized solar, electric vehicle chargers (ideally V2G chargers starting to roll out now), induction hobs, heat pump water heaters. The average solar install of 9kW with a V2G car in the garage would give 3kW for the home 3kW for the car (average annual kilometers) plus 3kW spare to export to the grid – coupled to V2G connected electric vehicles this can give the houseowner negative power bills for being virtually off-grid nearly all of the time.
Everyone's a winner from a Net Zero mandate for the NCCV2 – it's a no-brainer!! What we need to do is to stop trying to push rocks uphill by using regulation to impose good design, that's not the purpose of regulation and it is doomed to fail – the housing industry simply refuses to go there!!