New home costs to surge by up to $40,000 as energy efficiency measures set to take effect

Building groups want Queensland and NSW to delay the start of stricter energy efficiency requirements, saying increased building costs could exacerbate the housing crunch.

The cost of building new homes could surge by as much as $40,000 with the introduction of stricter energy efficiency requirements, a move building groups say could worsen the housing crisis.

Queensland and NSW will mandate higher energy efficiency requirements in the construction of new homes from October 1 as part of changes to the National Construction Code in 2022 to improve residential standards in new homes.

Better insulation, double-glazed windows, lighter roof colours and materials used in construction are some of the changes that builders and new homeowners will need to consider.

Building industry groups say the measures in NSW will add $20,000-$40,000 to the price of a new build. Master Builders Queensland estimates a $20,000-$30,000 increase to the cost of building in that state.

Victoria has deferred the requirement for homes to achieve a 7-star rating until May 2024, while South Australia, Tasmania and Western Australia have pushed the commencement until the end of 2024. Northern Territory has opted against the provisions.

The Bureau of Statistics reported that new home approvals have fallen 20 per cent in the 12 months to June, which comes amid a surge in immigration. The Housing Industry Association (HIA) said new build contract cancellations have doubled in 12 months, with a deterioration in borrowing power from the Reserve Bank’s aggressive run of rate rises.

“At a time when housing supply and affordability are the most challenging in our history, industry and homeowners should have more time to implement and prepare for such significant changes,” HIA executive director NSW David Bare said.

“With borrowing power already heavily eroded, these measures that add a substantial cost increase are only going to result in even fewer new homes.

“What we need right now is more supply, and I don’t see the urgency for these measures when it won’t see more homes being built.”

Experts say that new energy rules will make it harder for more Australians to build homes at a time when supply needs to increase. Picture: Brendan Radke

The measures come as the national cabinet gathered in Brisbane on Wednesday to discuss ways to overcome the housing crunch, including ways to unlock more land releases.

Mr Bare said those in the housing industry were not opposed to the measures, but want a delay to ensure the best outcome for all parties, including ensuring that costs can be kept down.

“We’re not saying don’t do it, the state of the industry at the moment needs time to absorb it and to find the most cost-effective solutions. It is still going to cost people money, so let’s minimise the cost,” he said.

The Minns government announced on Tuesday that new homes already under contract before October 1 would be exempt from new sustainable building standards until June 30, 2024.

NSW Planning and Public Spaces Minister Paul Scully said it would reduce the burden of increased building standards for those in the planning stages.

The Palaszczuk government is holding firm of a transition period until October 1 when all new homes will be required to meet greener standards. The state government estimates it will provide an average electricity saving of $185 per year across Queensland’s four climate zones.

Rules in Queensland and NSW will require new residences to be greener.

Master Builders Queensland chief executive Paul Bidwell said it would add further barriers to the very industry tasked with building more homes and quickly

“All the signs are pointing towards a worsening housing crisis. We’ve got to ask why the Queensland government is forging ahead with the decision to introduce liveable housing and energy efficiency provisions as part of the National Construction Code changes,” he said.

The peak housing bodies say that delays were needed due to the software used to assess how to adjust existing designs to meet the requirements not being available despite changes due to come into place in less than two months.

“Victoria, South Australia, Western Australia, and Tasmania have all recognised the significant impacts to affordability of increased material and labour costs, interest rate rises and supply chain constraints.”