Do passive houses add up?

Fiona Sutherland’s six-hectare Wairarapa property comes with Philippe Starck plumbing fittings and a design pedigree that traces back to Jason Quinn – the rocket scientist who spent a decade at NASA before becoming one of New Zealand’s first certified Passive House designers.

The house, called Waraki, is modelled to hold a steady 20 degrees year-round without conventional heating. It first came to market in 2024 and is back on the market again now, listed by negotiation. OneRoof’s own automated valuation currently puts the property at $1.32 million, roughly $310,000 below the council’s 2023 rating valuation of $1.63 million.

That gap sits underneath the five Passive Houses OneRoof showcased this month, ranging from a $950,000 award-winner in Foxton Beach to a $7.365 million lakefront estate near Queenstown. Each is a genuine feat of building science, yet none of them has yet answered the question an investor is likely to ask: does building to that standard pay off when you sell?

Five passive houses

The properties OneRoof selected share more than thermal performance. All five are one-off, architect-led builds commissioned by owner-occupiers, not standard rental stock built to a developer’s spec. Only two are formally certified: the Foxton Beach home, a Master Builder Gold Award winner and 2021 National Top 100 entrant, and Waraki in the Wairarapa.

The other three were, in OneRoof’s own framing, “built with Passive principles in mind” without going through the independent assessment that certification requires. That distinction matters, as a builder can borrow the language of Passive House – terms like continuous insulation, triple glazing, and airtightness – without the blower-door tests and energy modelling that turn a well-built home into a verified one.

What’s the standard?

Passive House, or Passivhaus, originated in Germany in the late 1980s and is now administered internationally by the Passive House Institute, with New Zealand projects designed, built, and certified by professionals trained and accredited through Passive House Institute New Zealand.

Certification rests on five fundamentals: continuous insulation through the building envelope, high-performance – typically triple – glazing, airtight construction verified by blower-door testing, mechanical ventilation with heat recovery, and the elimination of thermal bridging (junctions in a structure where heat escapes faster than through the surrounding walls). Get all five right and a home holds a stable temperature with minimal active heating or cooling, in any of New Zealand’s climate zones.

Premium paid up front

Estimates of what that costs in New Zealand vary by a wide margin. One Auckland-based PHINZ-certified builder puts the uplift for a 200-square-metre family home at $50,000 to $100,000 above standard construction, against a national average build cost of $2,500 to $4,500 per square metre.

That implies a premium of roughly 6% to 20% on a typical mid-range build. A Nelson-based passive house specialist quotes a steeper gap: around $7,000 per square metre for a certified build on a flat site, against $3,000 to $5,200 for an equivalent standard home on the same land, implying something closer to 35% to 130%.

Nobody has yet published a reliable, sector-wide figure for what Passive House certification costs in New Zealand. Both quotes above come from businesses selling the service, and the gap between them is wide enough to treat any single number with caution.

What’s consistent across the estimates is where the money goes: high-performance windows and doors account for roughly 40% to 50% of the premium, airtightness detailing for another quarter, and the mechanical ventilation system for 15% to 20%.

Savings banked over time

A certified Passive House is designed to use as little as 15 kilowatt-hours per square metre a year for space heating, against the 150 to 200 kilowatt-hours a typical New Zealand home built to current Building Code minimums consumes.

Against a national average power bill of roughly $2,588 a year, that gap compounds quickly, though the very low figures sometimes quoted for individual Passive House households, such as as little as $300 a year in some marketing material, come from individual case studies rather than audited averages and should be read as best-case outcomes rather than typical ones.

There’s a better-evidenced and considerably cheaper way to capture most of that saving. A home certified to 6 Homestar, the New Zealand Green Building Council’s tiered rating system, costs just 0.7% to 0.8% more to build than Building Code minimum, according to modelling commissioned by NZGBC.

ANZ’s Healthy Home Loan package currently discounts mortgage rates by 0.70% on fixed terms and up to 1% on floating and flexible rates for any home rated 6 Homestar or higher, owner-occupied or rented.

Modelling that used a more conservative 0.25% discount assumption still found combined interest and power savings of $62,800 to $98,000 over a 30-year loan, depending on house type and region – at ANZ’s actual published discount, the real figure is likely higher. Landlords qualify for the same scheme as owner-occupiers.

A certified Passive House clears the 6 Homestar bar with room to spare, but reaching it doesn’t require anything close to full certification.

Resale values still in question

The case for a Passive House might leave investors a little cold. Waraki’s algorithmic valuation sitting $310,000 below its council rating valuation is one data point, though it’s flawed: automated valuation models work by comparing recent sales of similar properties, and a one-off architectural Passive House on six hectares has almost no genuine comparables. The gap isn’t proof the market undervalues the home; rather, it shows the market doesn’t yet have enough transactions to value this category of home with any confidence at all.

The Foxton Beach property tells a similar story from the other direction. It carries a Master Builder Gold Award, a 2021 National Top 100 placing, and full Passive House certification, and is listed for enquiries over $950,000 against a council rating valuation of $970,000 – essentially in line with capital value despite the accolades.

New Zealand’s property data providers haven’t published anything that settles the question either way. Cotality, the country’s main source of resale and valuation data, doesn’t currently track a Passive House or Homestar resale premium.

The Infometrics modelling most often cited by green-building advocates measures financing and running-cost savings, not what buyers pay extra at resale. The one resale premium figure circulating in NZ Passive House marketing – a claim that Californian Passive Houses sell for roughly 9% more than comparable standard homes – traces back to an American study that local industry cites without naming or linking.

There’s no New Zealand equivalent. With only a handful of certified Passive Houses changing hands here each year, there isn’t yet enough transaction volume for a genuine premium to show up in the data, even if one exists.

What this means for investors

For a typical buy-to-rent investor, full Passive House certification doesn’t currently compute. The construction premium is poorly standardised and concentrated in fittings – windows, ventilation plant, and airtightness detailing – that a tenant pays nothing extra to enjoy and a future buyer may not pay extra to inherit.

The people buying the homes in OneRoof’s lineup, from Greytown to Lake Hayes, are buying comfort, design, and a lower power bill for themselves. That’s a legitimate reason to build one, but not an investment thesis.

The more useful number for most investors is already baked into the Building Code. The 2022–23 overhaul of Clause H1 lifted minimum insulation requirements nationwide: roof construction now needs to reach R6.6, walls R2.0, and windows R0.46 to R0.5 depending on climate zone.

That’s still well short of a certified Passive House, where walls typically run R4.0 to R6.0, roofs R7.0 or higher, and windows the equivalent of roughly R1.25 – but it’s a far smaller gap than existed five years ago. Every new-build investor is now constructing into a meaningfully warmer baseline without paying a cent for certification.

The more deliberate move available to investors building or buying new stock is targeting 6 Homestar rather than Passive House. It captures ANZ’s lending discount, comfortably exceeds the Healthy Homes Standards that rental properties already have to meet, and costs a fraction of full certification.

As more Passive House and Homestar-rated properties cycle through the resale market, Cotality and REINZ will eventually have enough transactions to measure whether a genuine premium exists.

Investors who build to a higher standard now, before the market has learned to price it, are making a bet on a number nobody can currently show them.

Fiona Sutherland’s buyer, whoever they turn out to be, will have to decide for themselves what Waraki is worth. That uncertainty is the state of the whole category: New Zealand has built some genuinely remarkable Passive Houses over the past decade, but it seems few buyers are yet prepared to pay a reasonable premium to live in one.

For advice on positioning new-build or renovated rental stock for both compliance and tenant appeal, contact Goodwins on 0800 GOODWINS or visit goodwins.co.nz.