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Australia’s $350 Million Push for 7-Star Energy-Efficient Affordable Housing

liam@tradeboom.com.auOctober 22, 20250 comments

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The Federal Government’s $350 million commitment to boosting Australia’s affordable and energy efficient housing supply is a crucial measure within the residential construction sector. 

This investment, which is a component of the overarching National Housing Accord, is specifically earmarked to support the delivery of energy-efficient affordable housing built to a minimum standard of 7 stars.

Announced as part of the 2022-23 Federal Budget, the funding is designed to leverage private capital and deliver a total of up to 20,000 new affordable dwellings through a joint agreement between the Commonwealth, state, and territory governments. 

The Federal portion of $350 million will directly support 10,000 homes over five years from 2024–25, with states and territories expected to match the commitment to enable the delivery of the remaining 10,000 dwellings.

A focus on affordability and energy efficiency

The primary mechanism for the $350 million is the provision of availability payments. This model is critical for the financial viability of affordable housing projects. 

It works by bridging the gap between market rental returns and the subsidised rents charged to qualifying tenants, making these ventures commercially attractive to institutional investors, including superannuation funds.

This targeted funding is set within the broader context of the National Housing Accord, a landmark agreement that establishes a national target of building 1.2 million new, well-located homes over five years from mid-2024. 

While the 20,000 affordable dwellings represent a smaller component of this ambitious target, the $350 million allocation serves a vital role in ensuring that a portion of the new supply is explicitly both affordable and sustainable.

The energy efficiency mandate

A key stipulation for homes built using this specific funding is the requirement to achieve an energy efficiency rating of 7 stars or greater. 

This mandate is significant for our industry, aligning with the rising demand for higher sustainability standards across all new construction.

The shift to 7-star design translates directly into reduced running costs for residents, providing better thermal performance that keeps homes warmer in winter and cooler in summer. 

Research suggests that improving energy efficiency can lead to a significant reduction in power bills, which is essential for alleviating “rental stress” experienced by low-income households.

By mandating this standard for energy-efficient affordable housing, the government is effectively embedding long-term savings and climate resilience into the housing stock.

A driver for supply and sustainability

The $350 million commitment is managed via the National Housing Accord Facility (NHAF), administered by Housing Australia, and works in tandem with the Housing Australia Future Fund (HAFF) Facility. 

Collectively, these programs are designed to facilitate the delivery of 40,000 new social and affordable homes over five years.

The immediate impact of the $350 million is to de-risk investment in affordable housing, encouraging superannuation funds and institutional investors to commit capital. 

For the building industry, this commitment signals a firm demand for sustainable construction, driving the need for skilled labour and materials capable of meeting the stringent 7-star minimum. 

This investment is crucial for delivering not just housing quantity, but quality, ensuring the pipeline of new supply contributes positively to Australia’s broader sustainability and social objectives.

Sources

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