What is NatHERS and Why Energy Ratings Matter
The Nationwide House Energy Rating Scheme (NatHERS) is Australia’s national framework for measuring and improving home energy efficiency.
The scheme has been guiding energy-efficient home design since 1993 and is now being expanded to include energy ratings for existing properties. This expanding role reflects a growing national push to lower household energy costs, improve comfort, reduce strain on the power grid and cut greenhouse gas emissions as Australia works towards net zero targets.
NatHERS uses a 0-10 star scale. A 0-star home provides almost no protection from external temperatures, while a 10-star home is so well-tuned to its climate that it stays comfortable year-round with minimal artificial heating or cooling. Most dwellings in Australia sit somewhere in between the two extremes, with a higher star rating translating into less energy consumption, better comfort and lower running costs.
For homeowners, builders, renovators, and property professionals, understanding NatHERS provides a clear metric of a building’s energy performance and its potential for improvement; and it's consideration should form part of your development due diligence process.
How NatHERS Star Ratings Are Determined
NatHERS star ratings are based on detailed simulations carried out by accredited energy assessors using software developed by the Commonwealth Scientific and Industrial Research Organisation (CSIRO), together with state and territory energy agencies. The software models how much heating or cooling a home’s design would need over a year to stay at a comfortable temperature. The result is a rating from 0 to 10 stars, specific to the home’s design and location.
What Factors Influence the Rating?
Assessors input a wide range of design details, including:
- Building orientation and layout
- Construction materials for walls, roof and floors
- Insulation levels
- Window size, type and glazing
- Shading, ventilation and local climate
A design optimised for Melbourne’s winters will differ sharply from one built for Cairns’ humidity, and NatHERS adjusts for those regional differences so the rating reflects the home’s performance in its environment.
The Role of Passive Design
The system rewards good passive design, using the building itself to maintain comfort naturally. Examples include:
- North-facing living areas that capture winter sun
- Eaves or awnings that block harsh summer glare
- Materials like brick or concrete that store and release heat
- High-quality insulation in ceilings, walls and floors
- Double-glazed windows and tight seals to prevent draughts
Together, these measures reduce the need for heating and cooling, which is exactly what the star rating measures. By considering these elements, assessors can predict the annual energy required for heating and cooling, and thus assign a star rating that reflects the home’s performance.
Beyond the Thermal Shell: “Whole of Home”
NatHERS focuses on a building’s thermal shell: the structure and materials that determine how efficiently it holds warmth or stays cool. A newer addition, the “Whole of Home” assessment, measures how much energy a dwelling uses overall, factoring in appliances, lighting, heating and cooling systems, and solar generation. This produces a separate score out of 100.
What the Ratings Tell You
- 0–10 Star Rating: How well the building’s design performs.
- ‘Whole of Home’ Score: How efficient the home is to run.
For the best results, developers should aim high on both measures.
Building Codes, Compliance, and NatHERS
The National Construction Code (NCC) sets the minimum energy efficiency requirements for new residential buildings, and using a NatHERS assessment is the most common way to demonstrate compliance.
In 2024, the minimum energy efficiency rating for new Australian homes increased from 6 to 7 stars for most houses and apartments. This change reflects an Australian-wide push to improve building energy performance; a 7-star home can be around 25% more efficient than a 6-star home in terms of heating/cooling needs.
Alongside the higher star threshold, the code also introduces the “Whole of Home” requirements, effectively setting an annual energy use budget for a home’s fixtures, such as HVAC and hot water systems. This means new constructions must also show that their planned appliances and systems are efficient enough to keep total energy consumption within set limits.
Compliance isn’t just for new builds. Australian governments are working together to deliver energy ratings for existing homes. Major renovations or extensions can trigger energy requirements, depending on your state. Even where not legally mandated, it’s often wise to voluntarily aim for a higher star rating when renovating. This “future-proofs” the property against potential tightening standards and improves its market appeal.
Benefits of Achieving High Star Ratings
Striving for a higher NatHERS star rating delivers financial, environmental, and market advantages.
- Lower Energy Bills: Energy-efficient homes use less heating and cooling. A 7-star home or above requires significantly less active heating in winter and less cooling in summer than a low-rated property. That translates to hundreds of dollars saved annually on electricity or gas. Over time, the savings add up substantially.
- Increased Property Value and Marketability: Energy efficiency is increasingly important to buyers and renters. Homes with a high NatHERS rating stand out in the market, often commanding a premium. Even in areas without mandatory disclosure, advertising a strong star rating signals comfort, lower running costs, and quality construction.
- Enhanced Comfort and Liveability: Star ratings reflect real-world comfort. A 1- or 2-star home can feel uncomfortable in extreme weather, with cold interiors in winter and stifling heat in summer. In contrast, an 8- or 9-star home maintains stable indoor temperatures year-round, with fewer drafts and hot spots. Residents rely less on heaters or air-conditioning, improving both comfort and lifestyle.
- Environmental Impact: Residential energy use is a major contributor to Australia’s carbon emissions. Reducing heating and cooling demand cuts greenhouse gas emissions, supports the energy grid, and contributes to national sustainability goals. Efficient homes also reduce pressure during peak demand periods, adding resilience to the system.
Higher NatHERS ratings are a win–win: lower energy costs, stronger market appeal, improved comfort, and reduced environmental footprint. Whether building new or upgrading an existing home, pursuing a higher star rating pays off financially, environmentally, and practically.
Strategies to Achieve a Higher Star Rating
Energy efficiency can be tackled at two points: during design for new builds or through retrofits on existing homes. The goals are simple: capture winter heat, block unwanted summer heat, and retain conditioned air with proper insulation and sealing.
Passive Design Strategies for New Builds and Major Renovations
Integrating energy efficiency from the start is far easier and cheaper than retrofitting later. Builders and architects aiming for 7+ stars focus on four key areas:
1. Optimal Orientation and Layout
- Position living areas north to capture winter sun.
- Limit west-facing windows to reduce harsh afternoon heat.
- Promote cross-ventilation by placing windows or vents on opposite sides of rooms.
- Zone the home so heating or cooling is concentrated in used areas, not wasted on rarely occupied spaces.
2. Insulation and Construction Materials
- Install high-quality insulation in ceilings, walls, and floors where possible.
- Match materials to climate: brick or concrete for thermal mass in regions with large day-night swings; lightweight materials for humid tropics.
- Seal gaps and cracks; airtightness prevents drafts while maintaining comfort.
- Pay attention to detailing around windows, doors, and junctions to avoid thermal leaks.
3. Windows and Glazing
- Use double-glazed or triple-glazed windows to improve insulation in colder regions, while in milder areas, low-e (low emissivity) coated glass can help reduce heat transfer.
- Consider window size and placement: north-facing windows for passive winter heating; minimal east/west glazing to reduce summer heat.
- South-facing windows provide steady light with low heat gain.
- Add shading: eaves, pergolas, adjustable awnings, or deciduous trees. Proper shading can cut cooling needs significantly.
4. Design for Local Climate
- Tailor the design to the environment. A 7-star house in Darwin looks different from one in Melbourne, but both perform efficiently.
- Use resources like YourHome climate zone guides or consult an energy assessor early.
- Iterate with NatHERS software feedback. Small adjustments in insulation, shading, or layout can move a design from 6 to 7+ stars.
- Early consultation avoids expensive fixes later and ensures compliance with building codes.
Energy Efficiency Upgrades for Existing Homes
If you own or are renovating an older property, targeted retrofits can lift its NatHERS rating and deliver real savings. Many Australian homes built decades ago perform poorly by today’s standards, often under 3 stars, but strategic upgrades can significantly improve comfort and efficiency.
- Insulation: Ceiling insulation is usually the easiest and most cost-effective starting point, as many older homes have minimal or degraded attic insulation. Installing modern insulation can dramatically reduce heat loss in winter and heat gain in summer. Where wall cavities exist, blow-in cellulose or foam insulation is an option. Accessible underfloor areas in cooler climates should also be insulated. Each increase in insulation reduces thermal leakage and nudges the star rating higher.
- Windows and draught-proofing: Replacing single-glazed windows with double-glazed units and thermally broken frames can transform efficiency. Secondary glazing is a lower-cost alternative. At a minimum, heavy drapes with pelmets or honeycomb blinds improve insulation. Draught sealing around doors, windows, floorboards, and vents prevents unwanted airflow, keeping conditioned air inside and cutting reliance on heating or cooling systems. Many homes gain one or more star levels from comprehensive sealing and insulation alone.
- Shading and ventilation: External shading over west-facing windows, such as awnings, blinds, shade sails, or strategically planted trees, can dramatically lower heat gain in summer. Ceiling fans or operable high windows and skylights help purge hot air efficiently. Small additions like pergolas with vines or adjustable louvres can turn sun-exposed rooms into cooler, usable spaces without blasting the air-conditioner.
- Upgrade old equipment: Modern high-efficiency heating, cooling, and hot water systems complement passive upgrades. Inverter air conditioners, heat-pump systems, solar hot water, LED lighting, and solar PV panels reduce running costs and overall energy consumption and contribute to the Whole of Home energy performance.
With these measures, it’s feasible to lift a low-rated home by several stars. A 2-star house from the 1970s, properly insulated, sealed, and fitted with double glazing and shading, could reach 5 or 6 stars. Comprehensive retrofits can achieve 7+ stars in some older properties. Every house is different, so professional advice from a NatHERS assessor or sustainability consultant is key. They can assess your home, pinpoint weak spots, and estimate the star improvement from specific upgrades. This approach creates a clear plan with measurable goals and ensures any investment in efficiency delivers maximum returns.
Conclusion and Next Steps
NatHERS star ratings are now a key benchmark in Australian property development and home ownership. More than just a regulatory requirement, they reflect real-world benefits: lower energy bills, improved comfort, and higher resale value. With minimum standards for new builds now set at 7 stars, energy-efficient design is shifting from optional to expected. Developers and builders who embed these principles deliver a superior product, while homeowners and investors gain financially and enjoy a better living environment.
Key takeaways:
NatHERS provides a trusted 0–10 star metric for a home’s thermal performance.
Higher ratings pay off with reduced running costs and year-round comfort.
Strategies include optimising orientation, insulation, and glazing in new builds, or retrofitting insulation, draught sealing, and efficient windows in existing homes.
Efficient homes support Australia’s environmental targets, reducing national energy demand and emissions.
Next steps: Start with an energy rating assessment for your project or existing home to identify where improvements are possible. Work with architects, builders, or accredited NatHERS assessors experienced in sustainable design. Government resources, like YourHome.gov.au, provide climate-specific guidance, and local programs can support upgrades with rebates for insulation or efficient appliances.
Find Your Next Development Site
Ready to put this knowledge into practice? Explore the latest development opportunities available across Australia:
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Disclaimer:
The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. While every effort has been made to ensure accuracy at the time of publication, the content is not a substitute for advice from qualified professionals, including financial advisors, mortgage brokers, or legal counsel.
Property development financing involves complex legal, financial, and regulatory considerations that vary depending on the location, project scope, and individual circumstances. Readers are strongly encouraged to seek independent advice tailored to their specific situation before making any financial, investment, or legal decisions.
The author and publisher disclaim all liability for any loss, damage, or adverse outcomes arising from reliance on the information contained in this article.
