What do latest climate change targets mean for NZ housing?

What does it mean for real estate with the new report from the Climate Change Commission?

10 February 2021

The country’s Climate Change Commission recommendations published at the beginning of February on decarbonising the economy gave Kiwis much food for thought. The Commission called for a ban on fossil fuel vehicle imports by 2035 to help lower carbon emissions and new home builders were told there are to be no new natural gas connections to the grid from 2025. Meanwhile, ageing gas heating and hot water systems are to switch to electric or biomass when they’re replaced.

Half the country’s cars should be electrified by 2027, more of us will be working from home and there will be more car sharing schemes for EVs.

So, how does this impact home buyers and homeowners? What does this add to your due diligence and how quickly should you move to adapt your home?

Belinda Moffatt, Chief Executive of the Real Estate Authority (REA) sees real estate consumer priorities shifting in the coming years in a number of ways as the country moves to meet emission reduction targets.

“With more people opting for electric cars, having a garage where the car can safely be charged might become a must-have for some people. For someone who’s avoiding a commute and, instead, is working from home, having an extra room for a home office might be a priority,” she says.

Living close to public transport is likely to become more important to Kiwis in the coming years.

Says Ms Moffatt: “If we see more people wanting to walk or cycle to the office, you’d expect they’d want to live closer to work. On the flip side, being well connected to public transport networks might be the priority for people who want to live further out and have a bit more space.”

Think long term when going to buy

The REA head says her advice to house hunters is to think about your long term goals when buying a home.

“Consider how your needs will change over time. Will your next car be an electric vehicle, so you need somewhere secure to charge it? Is there work underway to introduce a new train line or cycle route nearby, so you can catch public transport or bike instead of driving?”

These are good questions to ask, to help you find the property that’s right for you now and in the future.

What remains core to home buyers?

CoreLogic head of research, Nick Goodall says there’s no need to panic about the requirements mooted by the Commission which are under consultation for the next couple of months.“In the short term, I don’t think they’ll be strong drivers of demand or decision making (by home buyers) just yet,” he says.

“As information and standards become more mainstream, these influences on climate change may increase but for now, things like location, property type and size and distance to amenities will likely all trump all else,” he says.

Many still want their waterfront property

Just because no new gas connections will be allowed from 2025 doesn’t mean people won’t want to buy a house that currently has gas, says independent economist, Tony Alexander.

And he’s optimistic that tech entrepreneurs will come up with a good alternative to gas-standard cooking for those not convinced by induction stove tops.

“The private sector will come up with alternatives that are profitable,” he predicts.

This is the starting point of getting serious, says the independent economist.

“We have to take into account the impact of global warming but there’s more to come down the track,” he says.

Meanwhile, people aren’t responding to events years ahead, like sea level rise, by reacting to it now, adds Mr Alexander. “It’s not the way people think,” he says.

The Reserve - 4ha waterfront lifestyle sections

They are continuing to buy coastal properties, which may experience inundation in the coming years.

“The attitude is: “What do I care? For the next 30 years I’ll enjoy it and then I’ll be dead. I’ll get good value and the kids can scramble over the remains,” says Mr Alexander.

The low bank deposit interest rates, where your money is “going backwards” is a major factor with this thinking, he says.

What house builders say on NZ’s climate change targets

House builders around New Zealand, who have to think years’ ahead in how they design homes and their surroundings, are paying close attention to the Government’s messaging on climate change measures.

One of the country’s largest home builders, Classic Homes, will continue to be driven by customer choice when it comes to installing gas or adding charging units for electric cars, says Classic Group director, Matt Lagerberg.

Meanwhile for the house building industry to play a key role in achieving climate change targets, new initiatives and regulations would need to be introduced to the building code, so every developer and builder is playing by the same rules, he says.

“We need to factor in many other considerations like how we design and plan new communities with climate impact in mind, as well as dealing with waste and evolving the construction process, to name a few,” he adds.

Development and construction players need to be involved at national strategic and leadership level, he says. Because this is a complex industry which “requires the practical know-how when setting rules and guidelines around delivery.”

New regulations will have an effect on affordability

Mr Lagerberg says that these future initiatives and regulations will drive up the cost of building a home, so there will be issues to address around affordability

He, meanwhile, is looking to the Government to invest more in infrastructure to support public transport, urban development and growth.

“We can then design new communities from scratch with these factors in mind,” he says.

He notes as new regulations become the norm, a mass market will form and the cost of things like solar or car charging units should decrease.

The thermal envelopes of NZ Homes

Managing director of house builder, Lockwood, Andrew la Grouw, says there are other things “bubbling away” in the new home industry which will be affected by climate change. And one of the main issues will be how we improve the thermal envelope on our houses.

The Climate Change Commission would like to see new homes are one third more energy efficient by 2035.

34 Neville Road, Hobsonville, Auckland

As New Zealanders design houses, it’s important to always be thinking about “passive thermal performance,” having windows in the right places, not having too many windows, and remembering walls are good insulators, says Mr La Grouw.

“Design is really important, making sure you have good orientation to the sun, making sure it’s on the north side, with good eaves, and having insulation in the roof, walls and floor,” adds Mr La Grouw.

Another thing to think about is the materials we use to build homes, says the Lockwood MD. He’s optimistic that timber will rise as the most sustainable material rather than some of the manufactured panels currently seen in the market. He’d also like to see a balance of pine trees and more native trees grown that you don’t chop down.

Solar, meanwhile, though reasonably popular with home owners is not economically viable at this point. Things like solar energy will only work with government help, he says.

“It’s great that the Government came up with this master plan on carbon emissions, but the biggest player is central and local government. What I’ll be watching for is how they align their purchasing powers for these targets and how they lead,” he says.