New green home rules may push up construction prices

New energy efficiency requirements for homes and commercial property may increase construction prices, but property experts say it is unclear how much consumers will be affected.

Experts say the new “six star” energy efficiency standards, released by the Council of Australian Governments yesterday, are long overdue, and national rules are preferable to the current format of individual states deciding their own regulations.

Louis Christopher, head of property research at Advisor Edge, says that the changes to the energy standards were inevitable.

“I think the industry was heading that way anyway,” he says. “It has been slowly moving along; it’s been given a kick now.

“Corporate tenants are increasingly demanding that buildings meet certain and higher environmental ratings. So I don’t think it’s going to bother too many; you’ll get a few developers or managers jumping up and down, but the industry was moving this way.”

Christopher also says that residential construction costs may see a jump of up to $10,000 per home.

“My broad estimate would be an extra $10,000, but that is a very board figure and I’d need more details,” he says.

Currently the top rating for a home is five stars, which requires installing measures such as solar water heating, insulation and shaded windows. A six-star rating would certainly require this and more, but COAG has not defined what would be involved.

“I do concur that it will increase the fixed cost of building a new home and probably at a time when developers were being extremely squeezed,” Christopher says. “The notion that this will increase the cost of housing – yes it will, but there wasn’t much of a market there at the price they could sell it to begin with.”

But Ron Silberberg, managing director of the Housing Industry Association, says while the regulation is welcome it is still too early to determine how property prices will be affected.

That’s still to be determined and it depends on the way dwellings are cited and designed and the important point is that the Government wants to consult with the industry on implementation.

“Very few people would know what the real impact would be.”

But Silberberg says the changes to the regulations are welcome, and that the current model of states having their own regulations cannot be sustained.

“In our view the industry needs a road map of future directions and environmental regulation. We just can’t sustain ad hoc approaches and a plethora of different requirements across the country, there needs to be a national approach.”

Related story:

• Construction firms build on diverse foundations