Carbon tax will have a negligible impact on the cost of new homes

Discussion of the proposed carbon tax is practically inescapable for most Australians at the moment, but the proliferation of information doesn’t mean that things become more understandable.

This is particularly true for homeowners and those who are about to build a home.

Some housing and construction industry lobby groups claim that the carbon tax will increase the cost of an average new home by over $6,000. So that would be from around $313,000 to $319,000.

However, there are reasons to be skeptical of those claims, and the cost is likely to be much less than that. According to our analyses, the average 3 x 2 brick veneer home in Australia creates around 80 metric tons of carbon due to its materials, construction, and maintenance over its entire design life. If the proposed carbon price is to be $23.00 per ton of carbon, this equates to only around $1840.00 in additional cost for the average new home due to the carbon tax.

Because many trade-exposed industries, such as cement, steel, aluminium and glass-making qualify for up to 94.5 percent shielding from the tax, the resulting end cost will not be anywhere near as high as that. In fact, the end-cost to someone building a new home may only be around $100 for the average Australian home.

So your new home will cost $100 extra.

That’s $313,100 instead of $313,000.

In addition, if you are building a home you can request a number of easy, cost-effective ways to reduce the amount of embodied carbon and energy contained within a new home. This will also reduce the financial impact. 

For example, you could specify fly-ash as a substitute for cement in concrete, which would significantly reduce the embodied carbon of a new home, without affecting its structural integrity. There are also a number of cost-effective, low-carbon building materials available on the market. By making smart choices, the proposed carbon tax could have a negligible cost impact on the construction of new homes—in fact, the whole point of the tax is to empower consumers to make low-carbon choices.

It is only through the tax that carbon becomes “visible” during your purchasing decisions: By making wise choices, you can reduce not only your costs but also our emissions.

However, selecting low-carbon materials is just the first step in preparing for a low-carbon economy: We should also be designing our homes so they require less energy for heating and cooling, be selecting energy-efficient lighting and appliances, and considering renewable energy alternatives. All of these steps help to reduce our energy consumption and carbon emissions, without compromising our lifestyle.

Simple steps such as these are easy to integrate in the early design stages of a project, and will create homes that are more enjoyable to live in. As the focus on sustainability increases, these elements of design will grow in value as homebuyers increasingly recognize these as desirable design features.

The transition to a low-carbon economy is inevitable. Prospective homebuyers can do their part in the transition for $100.