Revealed: The payback time on an eco-home

The cost of turning a new-build house in Auckland into a sustainable, energy efficient home could pay for itself in as little as two years.

However, that payback time can balloon to up to 22 years elsewhere in the country.

Figures from the New Zealand Green Building Council show that an investment starting at $1200 for a 6-star rating - the minimum sustainability rating - could be covered though savings on energy and water bills.

Even the $21,000 needed to upgrade a new-build to an 8-star would be paid back within in ten years in power savings.

However, the figures show big differences around the country. In Christchurch, fit out costs run from $2400 for a 6-star upgrade to nearly $35,000 for an 8-star, and payback varies from five to 22 years.

READ MORE: How to turn a damp, rat-infested house into NZ's best eco home

In Wellington, payback varies from five to 15 years for the 6 to 8-star upgrades.

The sums were for measures that include increased insulation and higher performance glazing, efficient lighting, low flow toilets and taps to reduce hot water use, a heat pump, a water heat pump and rainwater storage.

However, full rating compliance can add as much $50,000 to the cost of a new build in certain parts of the country.

A more extensive fit-out includes features like proper kitchen and bathroom extraction systems, carpet, paints and materials that don’t emit unhealthy chemicals and timber from certified sustainable forests and so on. In Auckland, that adds up to more than $24,000 to reach an 8 star standard; while in Christchurch an 8 star upgrade doubles to more than $55,000.

Compared to Auckland, an 8 star in Christchurch needs to add $15,000 for a whole-house mechanical ventilation unit, $11,000 for extra insulation (and nearly $8000 for 150ml studs to accommodate those thicker walls) and another $10,000 for top end thermally broken windows.

“The extras are for things which we think are important in a sustainable home but that don’t necessarily have an immediate financial payback. They’re not just for the planet though,” says Sam Archer, NZGBC’s director of market transformation.

“Many of them are health related such as reducing the risk of mould through better ventilation, specifying paints that don’t emit noxious fumes, or designing the home so it doesn’t overheat in the summer. These are difficult to put a payback on but definitely result in a better quality home.”

Currently more than 1000 homes have a Homestar 6 rating or above: 776 have are Homestar 6, 122 have a Homestar 7 rating, 99 have a Homestar 8 rating and another two have 9 star rating. There are just a handful of homes and one apartment block that have 10 stars – the highest rating possible.

OneRoof editor Owen Vaughan said there was a growing awareness of the benefits eco ratings had on the value of a home, but owners shouldn’t expect to see immediate price lifts.

“Green building techniques are increasing in popularity in New Zealand but the scoring frameworks are only just beginning to enter the market. It may be some time before a high Homestar rating translates into higher sale prices.

James Wilson, Valocity director of valuation and innovation, agrees: “Given a historic lack of data on green buildings within New Zealand’s residential housing stock, it’s difficult to analyse the dollar benefits in terms of added value that a ‘green home’ provides over and above a traditional construction techniques / materials.

“But anecdotal evidence indicates that utilisation-approved and recognised green building techniques increase the overall sale-ability of a home. Buyers are drawn to the on-going cost savings and health benefits that can be provided, so ‘green features’ of homes are often heavily promoted during sales campaigns.”

The New Zealand Green Building Council notes that only Auckland households make savings in water use as neither Wellington nor Christchurch Council charge for water based on volume, but expect that in future all local councils should move to volumetric charges.

The annual hard cost savings are broadly similar in all locations at approximately $450-500 for 6 Star. For the 7 and 8 Star cases the annual hard cost savings are approximately $2000-2100 in Auckland, $2300-2500 in Wellington but only $1600-1800 in Christchurch, while build costs are much higher.

For a new build or renovation, just meeting the building code is not good enough, says the New Zealand Green Building Council. By its reckoning, a house built to code standards would rate a mere 4 stars, and it has introduced a free online check, called HomeFit, that allows owners or tenants to assess a house’s current performance.

New Zealand Green Building Council chief executive Andrew Eagles says: “We all know that New Zealand homes aren’t good enough - and thousands of Kiwis used the online check in just a few months.

“I’m sure a load of those who are now clued up on what to look for in a warm, dry home are looking at a place to buy or rent right now, so canny sellers and landlords are probably fixing up their homes right now.”

The HomeFit assessment also meets the requirements of recent Government legislation to improve homes, the Residential Tenancies Act. And, once the Healthy Homes Standards are confirmed, the HomeFit stamp can be used to confirm if a home passes this mandatory level too, the council says. This will hasten the adoption of these rating standards, says Wilson.

“Going forward, with the legislation to upgrade homes to minimum ‘healthy’ standards, we would expect that the appeal of homes which score highly in ‘green’ ranking system to con-tinue to grow,” he says. “We’ll see that especially among certain buyer groups such as investors who don’t want to be stung with large upgrading costs down the track.”

Four steps to a warmer, drier house

1. Insulate

HomeFit requires R2.2 insulation in the ceiling and R1.3 underfloor. Adding a top up blanket costs around $12 to $14/m2 installed for ceiling and $16 to $18/m2 for new bulk underfloor insulation, a cost of $2800 to $3200 for a 100m2 house. The insulation subsidy programmes run by EECA and selected councils are worth around $3500 to $3800.

2. Efficient heating

Heat pump prices vary widely depending on size: a 6kW heat pump is around $3000 to $4000, a whole house system up to $15,000. Flued gas heaters are more expensive individually ($4000 to $5000) but a ducted central heating system starts at around $12,000. Wood burners are $3,500 and up, pellet fires are around $5000.

3. Warm windows

Double glazing costs around $500 to $600 per square metre; retrofitting a whole house costs from $15,000 to $30,000 depending on the size of the house. Standard double glazing is now not much more expensive than single glazing, but a good quality thermally broken aluminum double glazed suite is 15 to 20 percent more. Secondary glazing varies, but allow $300 to $400 per square metre for magnetically attached types.

4. Hot water

Solar hot water and heat pump hot water systems earn extra credits for HomeFit PLUS, powering a well-insulated electric hot water cylinder or heat pump hot water cylinder. These systems range in price from $5000 to $10,000. Solar electric panels added to the electric options would cost an extra $5000 to $10,000 but with batteries to up to $20,000 to $25,000.

Start by retrofitting insulation wraps/lagging on electric hot water cylinders and reducing shower flows with WELS 3 star shower heads or flow restrictors which can cost anything be-tween $20 up to $200. Add dual flush toilets and kitchen and bathroom extract fans for around $300 to $500.