Posted on February 4, 2014 by Frances Tse
New BASIX targets – No change to housing affordability?
The NSW Department of Planning and Infrastructure has published new Building Sustainability Index (‘BASIX‘) targets for public comment. The NSW Government’s view is that the new BASIX targets will not affect housing affordability. However, a newspaper article from the Sydney Morning Herald on 21 January 2014 does not agree.
The BASIX scheme was introduced in 2004 to regulate water and energy efficiency of residential buildings. The scheme requires new residential development to achieve certain targets for reduced water and energy consumption and greenhouse gas emissions against a NSW average benchmark.
The current BASIX targets require up to a 40% reduction in potable water consumption and greenhouse gas emissions and minimum standards for thermal performance levels.
The proposed new BASIX targets will require:
- up to 50% reduction in water consumption for detached houses, attached houses and low-rise buildings,
- up to 45% reduction in water consumption for mid-rise buildings,
- up to 50% reduction in greenhouse gas emissions for detached houses, attached houses and low-rise buildings,
- up to 45% reduction in greenhouse gas emissions for mid-rise and high-rise buildings, and
- an increased stringency for thermal comfort equivalent to an increase of approximately one star under the Nationwide House Energy Rating Scheme.
The NSW Government states that the new targets will:
- ensure that more people can live in water and energy efficient homes,
- ensure that housing is well adapted for future weather conditions,
- encourage building professionals to adopt more sustainability technologies and improved design practices, and
- provide a net financial benefit to the NSW community of over $511 million and reduce our impact on the environment.
Importantly, while the NSW Government estimates that new BASIX targets will increase design and construction costs of an average house by $4,069.00, it states that “The changes to BASIX targets will not affect housing affordability, because any additional household costs will be offset by lower utility bills“. That is, an estimated saving of $7,254.00 over the life of a building (assumed to be 40 years).
This is different to a view expressed in the Sydney Morning Herald on 21 January 2014 titled ‘Cost increases as BASIX rule revisions hit home’ which states that home builders will need to pay up to $8,000.00 more to comply with the new targets and that taking into account the low interest rates for mortgages, there would actually be an $8 per year loss even after factoring in the utility bill savings estimated by the NSW Government.
As stated in the ‘Cost Benefit Analysis of Proposed BASIX Stringency Changes’ prepared by The Allen Consulting Group which supports the proposed BASIX target changes and which is also on public exhibition, the proposed changes to BASIX may result in an increase in up-front costs for house purchasers while providing benefits of lower energy and potable water use which accrue over time.
It therefore seems that while there is little doubt the new BASIX targets would benefit the environment, opinions differ on whether there will be negative impacts on housing affordability.
If one considers housing affordability on the basis of up-front house prices, both the newspaper article and the Cost Benefit Analysis agree that the change to BASIX targets will likely impact detrimentally on housing affordability.
However, if one considers housing affordability on the basis of costs over the life of a building, then the change to BASIX targets may or may not benefit housing affordability.
Submissions on the proposed changes to the BASIX target may be made to the NSW Department of Planning and Infrastructure until 14 February 2014.