The long view on ratings

Image: Robin Cowcher

It pays to reach for the stars when you build your home.
Professor Ralph Horne, from RMIT's Centre for Design, has a warning for new home buyers: don't rely on the sticker price. For the past four years he's been working on a project called Lifetime Affordable Housing in Australia.
The research was spurred by controversy over the way minimum energy ratings influence the price of housing.
"Some people argue that the regulations make houses more expensive to build and therefore less affordable, and that they exacerbate an already serious problem in Australian cities," Professor Horne says.

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"So we set out to discover what impact energy bills have on housing affordability. From a household's perspective, is it better to buy an eight-star house than a five-star house?"
His team analysed more than 80 designs from volume builders, modelling changes that raised the ratings as much as possible. Rather than making major alterations to the plans, the researchers upped the standard of the materials, insulation and glazing.
They calculated the cost of stepping each home up from five to six stars, then to seven and eight. Next, they compared the upfront costs with predicted energy savings over time frames ranging from five to 40 years.
"We think the optimal star rating for a house in Melbourne is somewhere between seven and eight stars," Professor Horne says. "Below that level, householders are worse off: over its lifetime, the house will be more unaffordable than if it were built to a higher standard."
There is a catch, however.
The best returns accrue to householders who stay put for the long haul. But while a new house has a lifespan measured in several decades, many people move on within years.
Professor Horne found that when costs are measured over a 40-year time frame, houses that reach eight stars become the most affordable. Based on these results, he argues the case for standards much more stringent than the current six stars.
"When you buy a house, you don't know how long you're going to be there. The energy efficiency regulations provide a 'social payback' over the lifetime of the building, because they give you the comfort of knowing that if you move, it will be into another eight-star house," he says.
"We can confidently improve the standards in building regulations without Victorian families being out of pocket. In fact, it would improve the resilience and the ability of those households to pay their bills in the future because those bills will be much smaller."
Even in the absence of tougher rules, he argues that householders should go beyond the minimum requirements. "For a Victorian family buying a new house they intend to live in, I think a seven-star home is a good place to start. If you go above that, you'll need to stay there quite a while if you want a private return."
Professor Horne and his team found that the most flexible designs achieved higher standards most cheaply. Shifting the orientation of a home — to make sure living areas face north — can boost five-star plans by up to a star.
"If you're building a new dwelling, it is worthwhile pushing your builder to deliver a more energy efficient home. You will save money in the short term and you'll save even more money in the long term."
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