New housing policies to put pressure on the building sector in 2024
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The building and housing industry is bracing for a challenging year in 2024 as new energy efficiency policies are set to impact the residential sector. Despite a current upswing in housing values, the policy shifts focusing on energy efficiency are predicted to hit builders and homeowners hard, especially in light of Australia’s ambitious national housing objectives.
Anna Porter, the Principal of Suburbanite, a property commentator, and valuer, has pointed out the significant role residential dwellings play in energy consumption and carbon emissions in Australia. She stated, “Residential dwellings account for around 23% of energy use in Australia and 11% of carbon emissions.” With climate change becoming an increasingly urgent issue, Porter suggested that energy efficiency improvements in homes are only going to escalate. “With climate change high on the agenda, we are already seeing policies introduced to improve the energy efficiency of homes across the country,” she added.
2024 is expected to see intensified efforts with major banks advocating for a National, standardised star-based rating system, hoping to mitigate credit risks. This push is anticipated to influence the credit offerings, leaning towards homes that are less susceptible to bill shock due to poor energy efficiency.
The Nationwide House Energy Rating Scheme (NatHERS), which currently gauges the thermal performance of new homes on a 10-star scale, has recently tightened its standards. “This energy rating framework has recently been increased from 6 to 7-stars (out of 10) which adds a load to the budget for those building a new home, the actual builder and associated stakeholders,” Porter commented. The adaptation to these stringent requirements is expected to place sustained pressure on builders, with profit margins predicted to remain narrow.
Additionally, Porter highlighted the challenges for existing homes, particularly older structures, which would face the impact of these new policies as they come into effect. “The housing sector will be hit hard in 2024 and beyond especially older homes and units as the new 7-star energy rating framework comes into effect,” she warned. She anticipates that older homes, especially those constructed before the 1980s, might require retrofitting to meet the new standards, as seen in the commercial sector.
The implications of these changes suggest a complex year ahead for the Australian building and housing industry. Will it endure the energy efficiency storm on the horizon, or will it pave the way to a more sustainable and responsible future in construction? Only time will tell, but one thing is certain: the heat is on for the sector in 2024.