Affordability is not just about how much we pay for our home. No one shopping for a new mobile phone would sign up for a plan without considering both the upfront costs and the monthly service costs over the life of the phone. And yet, we do this with houses and apartments.

While the cost of operating a home over its lifetime should be an integral part of the affordability equation, we rarely consider lighting, heating, cooling or energy use when we’re doing the sums on our mortgage repayments.

Australians now build the largest new homes in the world, overtaking the Americans in the wake of the global financial crisis. Our typical new home – replete with parents’ retreat, home cinema and triple garage – is now around 215 square metres, up 10 per cent in a decade.  The typical new home in America is 202 square metres, while new homes built in the UK are an average of just 76 square metres – almost a third the size of Australian mansions. And the bigger they are, the more they will cost.

At the same time, average household size is decreasing.  The Australian Bureau of Statistics predicts that household size will fall to between 2.2 and 2.3 people per household by 2026. While our houses expand and the number of occupants shrink, the amount we spend on running our homes continues to balloon.

The Australian Bureau of Statistics also says that by 2020, energy consumption in Australia’s residential sector will rise by 12 per cent on 2011 levels, and by 39 per cent above 1990 levels.  This will mean significant increases in household energy bills.

Utility costs are just part of the story, however. When both housing and transport costs are considered, where you live consumes a third of the average household budget. Transport is the second-largest cost to households, and rising petrol prices are felt most acutely in the outer suburbs of cities where car dependency is highest.

While this has a significant effect on the affordability of our homes, we rarely factor in the hidden price paid – loss of leisure time, time with families or even just time asleep – while sitting in traffic for hours each day. Today’s traffic gridlock is only going to get worse, with the Australian Sustainable Built Environment Council warning that travel times will increase by 25 per cent within the next 30 years.

At the same time, Australia’s housing markets are among the most unaffordable in the world. The 2013 Demographia International Housing Affordability Survey found Australia, once a shining example of modestly-priced, high-quality housing, has five of the top 20 most unaffordable housing markets in the English-speaking world.

Of the 337 markets assessed, only Hong Kong and Vancouver were less affordable than Sydney. While the survey considers housing to be affordable when the price-to-income ratio is 3.0, the median house price in Sydney is 8.3 times greater than the median gross annual income.  The results are breath-taking: it’s cheaper to buy a home in New York City (which doesn’t even rate in the top 20) than it is in Coffs Harbour, Port Macquarie or Wollongong!

We must change the paradigm so that people understand housing affordability as part of a package.

As a starting point, the long-term costs associated with our homes must be better articulated and understood. The data is clear. Our Value of Green Star research, published earlier this year, found that Green Star-certified buildings consume 66 less electricity and 51 per cent less water than average Australian buildings.

We also know, from countless case studies of Green Star-rated projects, that this translates into operational cost savings. The Lilyfield Housing Redevelopment in Sydney, which achieved a 5 Star Green Star – Multi Unit Residential v1 rating in 2009 for Housing NSW, is but one example. A gas-boosted solar hot water system, 267 square metres of solar panels and a four-kilowatt photovoltaic system to power common area lighting, deliver a combined annual saving of $19,000 – or $213 per unit – meaning annual electricity bills were slashed by 25 per cent. And yet from the very beginning Housing NSW specified that the project must be realised on a cost-neutral basis.

house savings

A clear scorecard for homes which reports on a range of measures from energy and water consumption to average trip times to local CBDs would help people better understand the long-term costs associated with their most significant purchase, and promote the concept of affordable living.

Of course, efficient, affordable homes cannot exist in isolation, so we must look at the bigger picture of efficient, affordable communities.

The Green Star – Communities sustainability rating tool examines economic prosperity alongside design and placemaking, environmental impacts, liveability and urban governance. For example, the rating tool drives on-the-ground action by rewarding community-level projects which have a percentage of affordable homes.

Green Star – Communities recognises that affordability encompasses a range of factors. As such, it rewards projects that integrate mass transit options – so that people aren’t stuck in their cars for hours each day.  It rewards connections to employment and education facilities so that people may work and learn locally, and it rewards access to local amenities so people have a vibrant, liveable and ultimately affordable community at their doorsteps.

The questions we must ask ourselves are: can we afford to continue building, expanding and consuming resources at current rates, and can we afford to live, work and play in communities which are disconnected, poorly designed and unsustainable?

Without a radical shift in the way we view our buildings and our communities, the future is looking expensive. Houses will continue to get bigger and more costly to operate. More and more people will live further from their work as our cities expand beyond our capacity to service them efficiently. The financial costs will be large, but the costs to our health, our lifestyles and our environment will be acute.

The opportunity to consider affordability in terms of long-term benefits, not just for short term gain, is available now.