Beginners guide to energy efficient homes in Australia
What are house star ratings and why do they have a huge impact on your energy bill?
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
It's no secret that Australian houses are very poorly built when it comes to energy efficiency.
If you've spent a winter in the average house, you'll know just how much you need to crank the heat to stop shivering. Purchasing an inefficient house could cost you hundreds of dollars more on energy each year, but this crucial information isn't made available when buying (unless you live in the ACT).
In fact, it's estimated that a 3-year delay in raising Australian building standards will cost residents an extra $1.1 billion in energy bills by 2050, and produce 3 million tonnes of greenhouse gas.
In this guide, we'll walk you through determining your own house's energy star rating and what it means, as well as what you can do to improve it.
How is the energy efficiency of a home measured?
In Australia, houses get a star rating out of 10 for efficiency, defined by the Nationwide House Energy Rating Scheme (NatHERS). Here's a few examples on the scale:
- A 0-star home may as well be open to the elements.
- A 6-star home does a decent job of blocking out hot or cold weather, but probably needs a fan in summer or heater in winter.
- A 10-star home will likely keep you comfy all year round by itself.
To give you an idea of how this might impact your bills, a 5-star house uses between 20 - 25% more energy in heating than a 6-star one.
How energy efficient should your house be?
Ideally, you want the highest star rating possible, since it will save you the most on heating and cooling costs.
New houses in Australia
New houses in Australia are required to meet a 6-star rating minimum, although this doesn't always happen.
According to Sorn Vimonsatit, Associate Professor at the School of Engineering in Macquarie University, the incentive isn't there for houses.
"For office buildings, the developer relies on rental income," she says. "They will put much more focus into how to make it appealing. If the developer builds to sell, the incentive to see long-term energy costs isn't there."
A CSIRO study from 2019 identified 7.5 stars as an optimal star rating, balancing out extra upfront construction costs with lifetime savings on energy.
What is the average?
Currently, the average Victorian home is rated a measly 3 stars, far from even Australia's minimum standard. Globally, we're even worse, with Australia's building standards already 2 stars behind similar developed countries back in 2008.
How can you check your home?
With efficiency ratings being so important – heating and cooling costs make up about 40% of your energy bill – they're surprisingly inaccessible.
A 2020 research project showed that 91% of real estate agents don't know the rating for properties they're selling, and 68% of them couldn't even say if the house had insulation. And this information matters – Europe has made it compulsory to disclose ratings for over 10 years.
"[Transparency] is very beneficial," says Professor Vimonsatit. "By making people more aware of these requirements… they use it as a selling point, they find out more about it.
"It creates competition among developers to perform."
In Australia, the burden of determining the rating is left to you, the occupant (and the one suffering from the cold). There are 2 real options to work out your home's efficiency after purchase:
- Hire an independent assessor through a program like Victoria's Scorecard Assessment, or private assessors in other states. This isn't free, but you'll get a rating plus a list of personal, cost-efficient recommendations on how to boost it.
- Run a self-assessment if you don't have the budget for a professional. A DIY home energy audit can help you identify weaknesses in your house, and what's fixable.
What should I consider when purchasing a house?
It's important to get as detailed information as possible about the house's design, and not settle for the basic assurances offered by real estate agents.
"People are told 'this is well insulated', and they're happy," says Professor Vimonsatit. "But it's not enough."
"In an old house, you'll see… double brick cavity walls. But between the wall and the roof... you'll see a big gap here and there, so it doesn't serve the purpose of having proper insulation."
Ask questions like:
- Is the house airtight, and where does it leak?
- How is the HVAC (heating, ventilating and air conditioning) system? How energy efficient is it?
- How well is the home insulated, and using what materials?
- Does the property have water fittings rated within 1 star of the best available?
- What type of window frames and glazing treatments have been used?
- Does the property have space to dry clothes outside?
So how do I make my home more efficient?
Once you've had your house audited or done it yourself, you can split up improvements into a couple of categories.
Do it yourself
- Shades. Proper shading can block up to 90% of incoming heat. This includes blinds, curtains or retractable awnings on windows, but also leafy trees to shade windows and walls that frequently face the sun.
- Plugging leaks. Can save about 10-20% on energy costs per year. Air can leak in through holes in mortar or house sidings, but also holes drilled for fixtures like taps, electrical outlets and more.
- Appliances. Appliances make up around 20% of your energy bill. You can choose more energy efficient lights (10% of your bill), for example. We have a guide on some simple household saves, plus the 5 most energy hungry appliances in your house.
Call a builder
- Insulation. Insulation is critical to efficiency, with good insulation cutting down heat loss/gain by 50% or more. Insulation is measured with an "R-value": how well it resists heat transfer. The government's "Your Home" guide recommends a minimum R-value of 4.1 for your ceiling/roof, and 2.8 for your walls.
- Glazing. Windows are notorious for transferring heat. Getting your windows glazed or double-glazed slows down heat transfer in winter by up to 20%, or up to 35% in summer.
- Solar. While solar panels don't technically impact your home's star rating, they can save you money in the long term and reduce your carbon footprint. We have a guide on estimated returns for solar panels here.
- Roof colour. In most cases, this is far too expensive to be practical, but switching out your dark roof tiles for a lighter colour could make an almost half-star difference in your energy rating. This is especially true in warmer climates.
Unfortunately, according to Professor Vimonsatit, most efficiency measures are implemented during the design process.
"If you buy a house that's already built," she says, "the only thing you can do is get insulation, or some sort of solar energy. There's not much you can do in terms of ventilation [which] is about the direction of windows and doors."
More drastic efficiency improvements
Here are some clever ideas and eco-measures implemented in Penola House, a 9-star dwelling in Melbourne. The house cost $420,000 to build, and uses 80% less energy for heating and cooling than a 6-star house (or one-tenth the energy of average existing houses).
1. Heating and cooling ideas (without using energy)
- House oriented to bring sunlight into all the major living spaces, with windows aligned for natural cooling routes through the house.
- Polished concrete floors and Reverse Brick Veneer walls create a "thermal mass" that stores heat in winter and cool air in summer.
- Stairwell doors and internal louvre windows to control airflow inside the house.
- Louvre vents for all exhaust fans, stopping unwanted air leaks.
- Reversible ceiling fans to cool down in summer and move hot air around in winter.
2. Special hot water systems
- Evacuated tube solar hot water system with natural gas booster for temperature control (hot water is around 25% of your energy bill).
4. Energy-saving designs and features
- Exclusive use of LED/fluorescent lighting.
- A "greenswitch" cuts standby power at night and when the house is empty (maybe $100 saved per year).
- A specially designed area in the laundry to hang clothes for natural drying.
4. Water saving devices
- 2 x 2,500L rainwater tanks for running the laundry, toilets and for watering the garden.
- Redwater valves to direct hot water that's cooled off to the water tank (instead of wasting it).
- Greywater gravity diversion system to distribute water to the garden underground.
- Water efficient taps, showerheads and toilets.
Is it worth improving your house?
Boosting your house's star rating can take a lot of work and money, but there are a number of long-term benefits.
And remember, full renovations may cost a lot, but cheaper measures like improving seals around doors and windows could cost as little as $15 per square metre.
1. Reducing your heating bills
Increasing your star rating has huge impacts on energy costs in the long term. A jump from 5 stars to 6 stars should cut your heating costs by around 25%, and aiming higher could be a smart financial decision.
A 2018 study by the University of Melbourne found that a full energy retrofit of houses in Melbourne's Bayside area to a 6-star standard would take 14 years to pay itself back. A 5-star renovation would need 15 years, meaning cheaper isn't necessarily better.
2. Improving the property value
Even if you're not planning to stay in your house forever, more stars means a higher resale price. In Australia, the University of Wollongong found that a higher star rating is typically associated with around a 5 - 10% premium on the sale price.
When compared to a 3-star home in the ACT, for example, a 6-star house attracted a 2.4% premium and a 7-star house a 9.4% premium.
3. Lowering your carbon footprint
Buildings produce around 25% of Australia's carbon emissions, and houses are a big part of that. Improving your house's energy rating will reduce your personal carbon footprint far into the future.
Where are the most energy-efficient houses in Australia being built?
Short answer, the ACT and Tasmania.
While the 6-star minimum applies around Australia, some states are doing better than others when it comes to building new houses. Here are the average NatHER star ratings for new houses built in various states between 2016 and 2018.
Source: The Conversation. NSW and NT have been excluded due to different building standards schemes.
As you can see, colder climates come with slightly better-built houses. If you're looking for an efficient new home, you'll have the best luck in the ACT or Tasmania.
Interestingly, the ACT showed the most improvement from 2016, which could be due to transparency in its property market. It's the only Australian region where real estate agents have to reveal the property's energy rating on sale or lease, letting buyers potentially demand a higher standard.
Buyers in other states simply don't have the information.
Who determines your home's energy efficiency?
Minimum house efficiency standards are dictated by the National Construction Code (NCC), which is published by the Australian Building Codes Board. Each state and territory has its own regulatory bodies to enforce the NCC.
Nationwide House Energy Rating Scheme (NatHERS)
NatHERS is the system that rates houses out of 10, based on the efficiency of their design. A NatHERS assessment evaluates a new home prior to construction, and makes sure they adhere to a minimum of 6 stars.
National Australian Built Environment Rating System (NABERS)
NABERS is a tool used to compare water and energy consumption of an existing house against other average households, unlike other schemes that apply during the design phase only.
It uses 12 months of water and energy bills to come up with an efficiency rating between 1 and 6 stars, with 3 stars corresponding to average performance.
The Green Star rating is awarded to buildings after construction is completed, and is managed by the Green Building Council of Australia.
The building's sustainability is assessed and awarded a star rating out of 6, assuming it meets minimum sustainability standards. A 1-star rating indicates bare minimum practice, while 6 stars indicates world leadership in sustainable design.
NSW Building Sustainability Index (BASIX)
BASIX is an online tool that applies to all new developments in New South Wales, as well as renovations and extensions that cost $50,000 or more. It sets minimum water and energy consumption targets when houses are being designed, taking into account heating and cooling appliances, hot water and more.
Victorian Residential Efficiency Scorecard
A program implemented by the Victorian government that provides star ratings for your home. Government-approved energy assessors will inspect your house and give you a report for a certain price.
The report judges your house on building quality, hot water and more, and recommends cost-effective improvements to raise your house's rating and lower energy costs.
Houses don't always end up as efficient as required
The National Construction Code allows several methods of verifying the efficiency of a new home, outside of the NatHERS star rating system. These are:
- Elemental provisions. This evaluates insulation, building sealing and window construction.
- Performance solutions. An alternate method for assessing unique houses that involve new technologies or non-standard construction.
- Verification using a reference building (VURB). Similar to elemental provisions but with slightly different requirements.
The VURB method awards a simple pass or fail instead of a star rating, which can lead to substandard houses.
"The requirements from the building code are more in terms of… energy consumption," says Professor Vimonsatit. "They talk about ventilation and all that, but it's still not very measurable."
Buildings verified by VURB may lack efficiency features like slab insulation or glazing on windows, and have an equivalent star rating below the NCC's minimum.
More guides on Finder
How much does the electricity cost for an electric car?
Find out how cost effective an electric car is to run compared to a standard petrol-operated car.
How cost efficient is the Tesla Model S?
Just how efficient are electric cars? We've weighed up the pros and cons of the Tesla Motor S to find out.
Finder Daily Deals: The 7 best deals in Australia today
Today's best online deals include: 75% off deluxe massage chairs, 45% off mini wildlife cameras, 64% off BBQ Grill Charcoal Smokers.
First home buyer’s e-course Module 2: Get your free money
As a first home buyer, what grants, incentives and discounts are available to you? How much can you save – and how do you get your free money?
A guide to using the Loopring Decentralised Exchange
Learn how to save on Ethereum gas fees by using the Loopring decentralised exchange, and earn money as a liquidity provider.
CBA’s new 0.99% green home loan: Who’s eligible + how to get it
CommBank has launched its 0.99% green loan following a pilot in February this year. Here’s how to get this ultra-low home loan rate.
Dreading bill shock this winter? Here’s how to minimise home heating costs
SPONSORED: Real, actionable tips on how to get lower heating bills every year.
loans.com.au Green Home Loan
A detailed review of loans.com.au’s Green Home Loan. Discover the features and benefits of this green home loan.
Best tyres in Australia
Hit the road safely with the best tyres you can buy in Australia right now.
2021 MG HS Review
MG's HS is a convincing mid-size SUV. It offers undeniable value, a well-designed interior, ample practicality and is a genuinely attractive car from the still fledgling brand.
Lower your household bills
Compare internet from over 50 providers in our broadband engine.
Check out our select picks of the best plans available.
Compare mobile broadband services, perfect for renters and travellers.
Ask an Expert