Research Briefing | May 3, 2024

Sustainability policy edging up building specification

Green targets are expanding as Australia looks to meet international commitments – notably reducing emissions to 43% below 2005 levels under the Paris Agreement. Buildings will be a key component of efforts towards these. The sustainability of a building is best measured through its carbon footprint. This has two main aspects – the embodied carbon from construction and the emissions from ongoing use. As the ongoing component becomes greener, the interplay of these is quickly shifting. Related policies are arising at all levels of government, albeit as part of a gradual, disruption prone process.

New dwellings are a key focus. Within this, energy efficiency gains have been targeted more than emissions from construction. Regarding existing dwellings, policy has typically looked to encourage improved outcomes, often through subsidies.

  • The most notable policy introduced of late is the National Construction Code 2022, gradually being rolled out across Australia. This raises building specification, increasing build costs per square metre. Depending on location, this can add between $15,000 and $30,000 to the cost of building a new home.

  • While this uplift in costs will likely have some negative impact on demand, it will increase the revenue base for market participants. For supply stakeholders, mixed outcomes are expected with material suppliers best positioned to benefit.

  • The prevailing environment is presumably the new normal. Further policy measures are to be expected. Bumps in the road and even some setbacks are likely, impacted by the political cycle and other priorities such as the current impetus to drive supply and improve affordability.
Back to Resource Hub