Seeing 7-stars: new home energy efficiency standards explained

The 2022 update to the National Construction Code (NCC) came into effect in Victoria in May 2024. It changed the minimum energy rating of new homes from 6 to 7-stars and introduced new whole-of-home energy consumption requirements. These improved housing efficiency standards will ensure that homes built today are more comfortable to live in and cost less to run.

In Victoria, energy use in our homes is responsible for 29% of all electricity use, 44% of all natural gas use and 22% of our greenhouse gas emissions.

Making them more energy efficient can cut household energy bills and emissions, as well as provide better protection from extreme climate events like heatwaves and cold snaps.

Homes are long-lived assets. Retrofitting later to improve efficiency is much more difficult and costly than getting it right the first time. Improving the performance of new homes is vital to ensure they can provide comfortable, affordable and climate-resilient shelter into the future.

What's new under NCC2022?

The updated requirements call for a minimum energy efficiency for a new home’s building shell of 7 stars out of a possible 10 through the Nationwide House Energy Rating Scheme (NatHERS).

The NatHERS rating is based on the amount of energy needed to heat and cool a home each year to maintain comfortable conditions inside, with adjustments made for different climate zones. Houses with higher ratings have more thermally efficient building shells and require less energy to be comfortable. In most locations, 7-star homes need 20 to 25% less energy than 6-star homes for heating and cooling, lowering heating and cooling energy costs.

The 2022 update to the NCC also introduced a new ‘whole-of-home’ requirement. Alongside the minimum 7-star rating for thermal efficiency, new houses must stay within an ‘energy budget’. The energy budget takes into account the energy consumption of the major appliances and the impact of any rooftop solar (or PV) system used to generate electricity on-site. It sets a maximum annual energy use for heating and cooling, hot water and lighting (and swimming pool and spa pumps where relevant). These can be offset to some extent by adding a rooftop solar (PV) system to the home.

The energy budget for class 1 dwellings – stand alone and semi-detached homes – is more stringent than the budget for class 2 dwellings (flats and apartments).

The whole-of-home energy requirements can be assessed using one of the NatHERS whole of home rating tools, such as our FirstRate5 whole of home rating tool.

In these tools the energy budget is measured using an index between 0 and 150. For class 1 dwellings, a score of at least 60 is required to meet the whole of home requirements. For class 2 dwellings a score of at least 50 is required.

The new requirements can be easily met with:

• a combination of efficient heating, cooling, water heating and lighting (and pool and spa pumps where relevant)
• an offset provided by the addition of a rooftop PV system where necessary.

Our FirstRate5 whole-of-home rating tool also provides:

• estimates of the house’s annual energy bill, including the fixed supply charges
• annual greenhouse gas emissions, making it possible to assess the impact of appliance choice.

High sustainability houses can be designed to have very low, or net zero, greenhouse gas emissions and energy bills.

The NCC update also includes a universal design standard based on Livable Housing Australia’s Silver Level guidelines. This will increase the stock of homes with accessibility features and support flexibility of use for all Australians.

New homes are going all-electric

Starting from 1 January 2024, new homes and apartment buildings that require a planning permit must also be all-electric. They must have electric heating, water heating and cooking appliances.

The new policy does not impact:

• new dwellings that received a planning permit before 1 January 2024 or do not require a planning permit
• existing homes that have a gas connection
• renovations and extensions to existing houses.

Over 50,000 new homes are built in Victoria each year. Around 40,000 connect to the reticulated gas network, adding to residential gas demand. Prohibiting gas connections to new residential buildings is a critical step to prevent the expansion of fossil gas use and it’s associated greenhouse gas emissions and expensive, long-lived gas infrastructure.

The good news is that all-electric homes cost less to run. The FirstRate5 whole-of-home rating tool can estimate energy bill savings in an all-electric home compared with electricity and gas.

All-electric appliances in a new build don't need to cost more to buy and install than the combination of electric and gas appliances that have traditionally been used in most homes. It is also much cheaper and easier to build a new home as all-electric than to retrofit efficient electric appliances later.

Does it cost more to design to 7-stars?

In many cases, it need not cost much more.

Designing with passive solar principles is one of the most important considerations when building a 7-star home. As new home energy performance requirements increase, optimising the orientation of the home will continue to be the most cost-effective way to maximise the efficiency of a house's building shell, and therefore the star rating. This is achieved by placing living areas to the north and providing appropriate shading from summer sun

Good architects and designers know the importance of considering orientation and the local climatic conditions when designing an energy-efficient home.

Shannon Battisson, National President of the Australian Institute of Architects, stresses the importance of homes that are designed and built for their specific climate zone. “Even in the harshest of climates, achieving the new 7-star minimum isn’t difficult as long as we start by getting the design right first. If you’re looking to build, get the right team together to help guide you through the design and build of what will be a piece of built legacy for generations to come.”

Appropriate design will differ from house to house depending on factors like climate, orientation and construction materials. In most cases, the new standard can be met through relatively simple and low-cost changes early in the design process.

The key differences between a 6-star and 7-star rating may include taking better advantage of opportunities to heat the home passively in winter while shading it in summer.

As well as good orientation for solar gain when it’s desired, this can be done using:

• improved ceiling, wall or underfloor insulation to suit the local climate
• high-performance glazing to better insulate the home from heat loss in winter and heat gain in summer.

Homes with poor orientation will need to work harder to achieve 7-stars through:

• increased levels of insulation
• better glazing
• careful consideration of window sizing
• smarter floor plans.

This Department of Energy, Environment and Climate Action fact sheet shows 3 steps to a Code-compliant, energy-efficient home.

What about the builders?

Some building industry groups expressed concern that adjusting their practices to build to 7-stars would be difficult. However, lessons from the introduction of the 6-star standard suggest that industry will adjust quickly and at low cost.

Arden Homes, a builder that participated in our 7 Star Homes program, is taking an industry-leading position on sustainable homes.

'Moving to a 7-star minimum energy rating makes a lot of sense for us, as well as for our clients,' says director Dean Morrison.

'Increasing the energy rating of new homes isn’t just better for the environment; it also means our clients benefit from greater comfort in every season, plus year-on-year savings when it comes to energy bills.'

Going beyond 7-stars

Market leaders and many informed homeowners are already aiming for homes that are 8-stars and above, and exceed the new whole-of-home requirements. Achieving better than the 7-star minimum will now become easier and more cost-effective.

The new regulations are a step towards even better-performing homes, with the goal (according to the national Trajectory for Low Energy Buildings) being homes that are “zero energy and carbon ready”, or in other words 'net zero carbon' or even 'true zero carbon' homes that offset embodied energy as well as operational.

Future-proofed homes should also provide for electric vehicles (EVs). They should include electrical wiring to the garage or carport for the future installation of an EV charger.

As buildings become more efficient and better sealed, it also becomes important to consider ventilation to ensure fresh internal air. This can be done by designing for natural cross and stack ventilation either

• through windows opened and closed at appropriate times through the day
• by installing a mechanical ventilation system with heat recovery for extra efficiency.

Such a system becomes important in very airtight homes with less than five air changes per hour at 50 pascals (ACH50). The NCC effectively requires new homes to be under 10 ACH50, but post-build airtightness testing is not yet mandatory.

More information

View the changes in the Australian Building Codes Board's infographic.