How Much Does a Passive House Cost? 8 Factors Influencing Price
Construction costs are soaring. Inflation is high. It's natural for you to seek clarity on the potential costs for your dream home. But in this custom design market, it’s really difficult to tell you how much a passive house costs.
If we were churning out cookie-cutter homes on level plots, answering this question would be a breeze. But alas, we’re making custom-designed homes—a prototype of one!
That said, we took a look back at the contract prices of our last 18 projects spanning the past two years to gain some insight into construction costs. To adjust for inflation during this period, we factored in the Consumer Price Index (CPI) for the older projects.
Our homes were categorised into three distinct groups:
New Build Passive House (defined as any home achieving a Passivhaus low energy status or higher, regardless of certification status)
New Build High Performance
Alterations & Additions (deep retrofit/whole of house)
We also included the garage, decking, and porches in this square metre rate. But, to offset their lower cost, we introduced an equalising factor by 1/3rd. [This spreadsheet has gotten pretty complex, but we feel it is important to distribute costs appropriately for an accurate representation].
We found that the average cost for a passivhaus is $6153m². For a new-build high-performance house, it was slightly lower at $5962m². This is a 3.21% difference in price between Passive House and High-Performance House constructions.
Out of interest, the average contract price of our ‘whole of home’ alterations and additions projects came back at $5,540m².
Typical exclusions are as follows:
Demolition (for new builds)
Landscaping
Renewables (solar and battery)
Appliances
Lighting
Curtains and blinds
We must caveat that Altereco’s ‘minimum standard high-performance home’ far surpasses the baseline set by the building code. If we were to compare Passive House costs against a volume builder home, the price disparity would be substantial. However, since you're here, reading this blog, you're probably not considering the volume build route.
So, what's the takeaway here? It's clear that there's a multitude of factors at play, each contributing to the final contract price. Let's delve into these factors in more detail below.
#1 Geography & Climate
Before a build begins, each project will be bound to specific site-related costs.
Location: Undertaking a project in a regional or rural location may mean extra expenses related to the transportation of materials and labour. Conversely, projects in inner Melbourne occasionally necessitate road closures and permits, incurring additional costs.
Climate: Objectively, we are designing and building homes that provide comfort, regardless of which climate you may be located. Clearly, an alpine climate will need a tougher building envelope. It must withstand the harsh winter. In contrast, some parts of Australia have mild temperatures. It's easier to keep indoor spaces comfortable there. So, the building's shell costs less.
If you’re on the hunt for a new property, we would highly recommend input from your designer or architect regarding the suitability of one site from another.
Henry II, Northcote
Hempcrete House, Lyonville, Central Victoria
#2 Site Conditions
Site costs are typically 5-10% of an overall build budget. However, we have experienced very challenging sites—like Wye River—where terrain and access have driven this cost up to 15% of the build budget.
Terrain;
Sloping sites are far more challenging to build on. Site cuts and retaining walls are expensive.
Soil conditions;
Clay, sand, rock, fill, contaminants etc, each typify a totally different outcome from an engineering point of view.
In certain projects situated in Melbourne's Inner West, we encounter challenging soil conditions, often characterised by notoriously poor quality. Builders often encounter substantial floating rocks while excavating soil, requiring extensive digging through unstable soil. This, in turn, leads to the implementation of expansive footings and intricate slab designs to address the challenges posed by the unfavourable soil conditions.
Tight, compact sites;
The accessibility of a construction site carries substantial implications for overall project costs. Take, for instance, a residence located in inner-city Melbourne; limited site access can pose significant challenges. In scenarios where there's no rear or side laneway, transporting materials becomes a labour-intensive process. Builders may resort to manual methods, such as wheelbarrows, to navigate through the dwelling, amplifying the workload.
Addressing these challenges might necessitate the use of a crane, potentially requiring street closures for a period. The combined expenses of crane hire and associated logistics can escalate costs considerably. This consideration becomes paramount during initial discussions with potential clients at their homes, forming a crucial aspect of budget assessments.
Councils in inner-urban areas are red-hot on the use of public spaces like street occupation & safety, parking, delivery & waste management etc.
Site Services & Utilities
Access to utilities is pivotal. It shapes construction costs and influences project feasibility and expenses. Proximity to essential utilities like water, electricity, and sewage directly impacts the ease and efficiency of construction. Projects in remote or challenging locations may incur higher costs due to the need for extended infrastructure.
Conversely, well-connected sites with established utilities often enjoy cost advantages. Timely and reliable access to utilities streamlines the construction process, reducing the need for elaborate arrangements or temporary solutions. In essence, the availability and accessibility of utilities significantly shape the financial landscape of construction projects, influencing both planning and execution.
Demolition of existing buildings and removal of vegetation
The expense of demolition is most definitely on the rise due; sorting, recycling and dealing with hazardous waste prevalent in more modern buildings.
Having these conversations up front with our clients will help them understand where costs are going in their build, allowing us to budget accordingly.
By getting a builder onboard early in the design process, we can better understand these constraints.
#3 House Size & Scale
Size stands as a pivotal factor influencing construction costs. Australia, alongside the USA, grapples with a trend of building some of the world's largest homes, driven not by necessity but by a desire for opulence and ego (sorry, not sorry).
With an average household size of 2.5 persons, the typical freestanding house exceeds 240m².
Constructing such large homes results in escalating construction costs and buildings that have heavy resource dependence transforming them into energy guzzlers.
Despite these drawbacks, many prioritise designing spaces for rare events, neglecting the efficiency of smaller, purpose-driven areas.
Our solution advocates for a mindset shift, challenging the status quo, emphasising a thoughtful design approach based on behaviour and activities.
A smaller, well-designed home with smart functional and flexible spaces can reduce construction costs, provide superior comfort and significant savings in ongoing costs.
Stop listening to your real estate agent and thinking about resale value in an imaginary market in 5, 10, 15, 20+ years' time. Instead, build to your needs and requirements now…and in the future.
#4 Design & Architectural Complexity
Sketching aesthetically pleasing lines on paper during the initial design phase is enjoyable. But, it's crucial to recognize this: a complex design can greatly raise costs.
Opting for a straightforward building form can simplify the construction process. Smart design streamlines building construction. It also improves function. And it does so without needing more floor area or extra circulation space. This keeps costs low.
Heat Loss Form Factor
At Altereco, we consider Heat Loss Form Factor (HLFF). This is the ratio between the building’s envelope area (EA) and its net floor area (NFA).
HLFF is a number generally between 0.5 and 5, with a lower number indicating a more compact or efficient building. A single-storey passive house should aim to achieve HLFF 3 for maximum thermal efficiency.
Let's say you build a 200m² house. Compare our house with a factor of three versus a factor of four.
200 x 3 = 600m2 EA
200 x 4 = 800m2 EA
Whilst the house is the same size, the larger EA requires 33% more cladding, insulation, membranes, windows and doors.
Also, the larger envelope will have more surface area. It will be exposed to the elements and cannot be as energy efficient.
To perform as well as the smaller envelope area, the thermal resistance will have to be boosted. A double whammy of extra cost and extra thickness.
Want to be conscious of your precious pennies, pay attention to HLFF!
Glazing Ratio
Firstly, we must acknowledge that windows are the weakest component of a thermal envelope. They simply don’t have the thermal resistance that we can achieve in our walls, floors and roof.
Additionally, they’re the most expensive component within the thermal envelope. So optimising your window sizes becomes critical to building performance and your bottom line.
Glazing to Floor Area Ratio (G:FA) is one rule of thumb to optimise glazing. As a general rule in our climate, the total window area should be less than 25% of the total floor area of the house for optimal thermal efficiency.
We have definitely designed houses with far higher glazing ratios. Our own Harry Passive House has a glazing ratio of 37%. A decision that we made early, appreciating the extra cost and challenge to meet high-performance standards.
It's not ideal for a performance perspective. But, we now get to look out on the canopy of our messmate stringy barks. We can watch the gang gangs drink from the birdbath. We can feel a real connection to our environment.
Binq Windows at our Harry Passive House, Anglesea
Looking out onto the Stringbarks at our Harry Passive House, Anglesea
#5 Fitout, Finishes and Materials
In general, 30% of the overall build budget of an architectural home is spent on the fitout.
The overall scope of fitout
Scope of internal fitout:
Complex or highly customised design elements such as bespoke joinery and extensive or intricate tiling patterns will raise costs due to the additional labour and specialised materials required.
Specification of finishes
The selection of finishes and materials plays a pivotal role in construction costs.
Adding intricate custom joinery, luxurious stone benchtops, and premium claddings can have a profound ripple effect, significantly influencing the construction cost. This impact is more pronounced in larger houses. It leads to a rise in the total construction expenses.
Careful consideration of material choices is therefore essential to strike a balance between aesthetic preferences and budget constraints.
Begin with a basic rule of thumb: allocate a minimum of 10% of the total build cost for a quality joinery package. However, we appreciate that high-end architectural homes can significantly burst this bubble.
For interior designers, regrettably (although I'm confident they will agree), this is likely the most significant (and straightforward) change to make when aiming to lower the overall building expenses during a value management process.
Altereco Design does not bring in external interior designers into our process. By keeping the interior design process in-house, we can take responsibility for helping the project stay on budget. We have a deep understanding of the project's design vision and goals, and we work collaboratively with the design team and other project stakeholders to ensure that all interior design decisions align with the project's overall design intent.
#6 Energy Efficiency
In Melbourne, the average household quarterly electricity bill is $313.
We know from all of our passive house projects, which operate on net-zero energy, with the inclusion of renewable energy, will be at most 10% of this cost.
In all likelihood, this is influenced by the service charge! Building energy-efficient homes definitely saves money in the long run.
Thermal resistance
7 stars is now the minimum energy requirement. As a result—especially in Australia’s cooler climates—this will demand better building performance.
From a NatHERS perspective, this will demand better thermal resistance and far better quality doors and windows.
In essence, as of 2023, the baseline for minimum performance standards has changed. Therefore, from a cost point of view, we don’t see much difference between the insulative specifications of code minimum versus passive house.
Windows & Doors
The glazing components of a home play a unique role. They connect us with the outdoors and provide light and air. But they also greatly affect a building's performance. They must provide warmth, block UV light, keep out rain, and stop air leaks. Quite critical elements and not a component of the build that you should skimp on.
In our experience, external windows and doors are typically around 5-7% of a build—assuming the suggested glazing ratio above (25%) is adhered to. However, it’s not uncommon for an architectural home to have a glazing ratio of 30-40%.
If budget is of concern, squeeze on your glazing ratio rather than the quality of your windows and doors.
Airtight envelope
“Heat goes where air flows”
This is one of my favourite sayings. Air infiltration significantly impacts the energy performance of a building. As air tightness goes up, bills for heating and cooling go down.
An airtight layer plays an important role in reducing the heat losses from draughts, as well as protecting the fabric from condensation.
Unfortunately, NatHERs currently assumes a poor building airtightness (10ACH), whilst, on the flip side, the Passive House tool demonstrates that airtightness results are critical to the overall equation.
Air tightness is measured by the number of times per hour that a building's air volume completely changes and is known as Air Changed per Hour (ACH).
Passive House certification requires ≤0.6h ACH @50Pa in a new build and ≤1.0h−1 ACH @50Pa in a retrofit or low-energy home. While a passive house sets a high bar, even a score of 2 to 3ACH would result in a very efficient home.
So why is this important? How does it translate? Well, if your house resulted in an ACH of 5 - your heating demand would double!
**Note that the average ACH of recently built Australian homes is 15 ACH.
#7 Construction Methods & Building Materials
Construction methods
Simple design is most likely to equal simple construction methods. The more complex the geometry, the more complex the engineering solution. So, the more challenging and cost-prohibitive the construction method will be.
If money is no object, go for it. Whereas if you’re trying to prioritise performance and meet budget over anything else, then your construction methodology needs to be simple and buildable.
A collaborative design and construction team (designer, builder, engineer) should result in optimising the buildability and then, therefore, the efficiency of the structure of your building.
In our projects, the superstructure and thermal envelope would equate to about 30% of the overall build cost. Therefore a more adventurous, architectural design and engineering solution may push this figure up to 35 or even 40%.
Choosing the right window package for a project is a good example. A balance of aesthetic, cost, performance, durability and functionality.
Building materials
Materials make up a large percentage of construction costs. It's a critical consideration in budget planning. Specifically, the choice between cost-effective options and premium materials significantly shapes spending.
Factors such as durability, availability, and sustainability further impact costs, as premium or specialised materials can elevate expenses.
The selection process demands a strategic balance between quality, longevity, aesthetic appeal and budget constraints. Thoughtful consideration of construction materials is pivotal, directly influencing the financial feasibility and success of a construction project.
#8 Builder
So you’ve heard the saying “you pay peanuts, you get monkeys”. Well, this couldn’t be truer in the building industry.
There are similarities in how builders operate; some will build up to a standard, whereas others will build down to a dollar. Which would you choose if you’re trying to build a healthy, comfortable, long-lasting home?
There’s no point in cutting the price on your trades when you’re trying to execute a well-built home. You want good airtightness, insulation that performs as intended in your thermal analysis, and buildings that outlive us.
So when you ask how much does it cost to build a passive house? You really cannot compare this to a minimum standard code built home because the approach to the construction and the care taken is completely different when building a passivhaus.
You’re simply not comparing apples with apples.
At Altereco, we advocate engaging a builder once our design reaches a resolved state, providing typical drawing sets, a detailed 3D model, preliminary budgets for interior-related items and data from our Passive House Analysis.
We have a good idea of how we’re going to build it, the materials that we’ll use in the process, and the performance outcome of the home. While our design phase unveils the home's potential, accurate estimation of the project requires a builder's expertise.
Early collaboration fosters trust and rapport, ensuring a successful journey from design to construction and aligning budget constraints with project aspirations for optimal results.
An understanding of the above variables is essential if you're in the process of buying land or planning a renovation. Getting your designer, key consultants, and builder on board early and swimming in the same lane, is crucial for a successful outcome.
If you want to learn about our process or assess how your project brief, budget, and site align, feel free to reach out.