Energy ratings rise for new NSW homes

New residential buildings will need to attain 7 star thermal performance ratings under a new BASIX policy announced by the NSW Government today.

Treasurer and Minister for Energy Matt Kean said the Sustainable Buildings SEPP is designed to reduce household energy bills while delivering more comfortable homes to residents.

“These new standards will drive more energy-efficient homes from Bondi to Broken Hill and beyond, with better design, better insulation and more sunlight,” Mr Kean said.

“People living in new high-rise apartments in suburban Sydney will save up to $150 a year, new Western Sydney homeowners will see a reduction of $720 a year, and our regional communities as much as $970 a year.”

The announcement represents an update to the Building Sustainability Index (BASIX) tool, increasing the average star rating from 5.5 to 7 and will come into effect from October 2023. The new ratings will also apply to renovations greater than $50,000.

Minister for Planning and Minister for Homes Anthony Roberts said the announcement would also impact the construction of commercial buildings.

“We recognise the importance of good design and sustainability in planning, that’s why we are progressing updates to our online Building Sustainability Index (BASIX) tool and introducing sustainability requirements for new commercial buildings,” Mr Roberts said. “We need to ensure the places we live, work and stay in are more comfortable – all while we save people money on their power bills and contribute to our net zero target.”

The Department of Planning will also be including an index to measure embodied emissions of construction materials.

Tuesday’s retail sales report could be the scrap of evidence that tips the balance as Federal Reserve officials decide how much to cut interest rates on Wednesday.

It is practically a given that the central bank will reduce rates. Inflation has fallen to its lowest point since February 2021, giving the Fed more flexibility to focus on the second component of its dual mandate—achieving maximum employment. Although the labor market remains resilient, the most recent two jobs reports have been weaker than expected, putting some pressure on the Fed to loosen monetary policy.

The question now is by how much rates will fall—0.5 percentage point, or 0.25 point? The indications from interest-rate futures are split , recently favoring the more aggressive half-percentage-point decrease.

Andrew Hollenhorst, an economist at Citi , leans toward the likelihood the Fed is more cautious on Wednesday, cutting rates by 0.25 percentage points. But he notes that it it is a close call that depends on the dynamics of the bank’s rate-setting committee and the strength or weakness of Tuesday’s retail sales report.

A positive surprise would suggest that both consumers and the labor market remain resilient, paving the way for a more modest cut. If the report comes in well below expectations, however, Fed officials may grow concerned that a weaker labor market is weighing on consumer spending, which could lead to a bigger cut, Hollenhorst added.

Louis Navellier, founder and chief investment officer of the money-management firm Navellier agrees. “In theory, if the August retail sales report is horrible, then a 0.5% Fed key interest rate cut may be forthcoming on Wednesday,” he said.

Economists are expecting retail sales will decline by 0.2% in August from July, according to FactSet. They jumped by a surprising 1% in July .

Lower gasoline prices and car sales will likely drag the headline number lower. Indeed, stripping out car and gas sales, retail sales are projected to increase by about 0.3% month over month.

Yet there is growing concern that even excluding autos and gas sales, the sales figure will be soft. While spending was remarkably strong in July, the Fed’s latest Beige Book flagged that consumer spending ticked down in August, points out Bill Adams, chief economist for Comerica Bank . Many retailers, particularly those catering to lower-income shoppers, have warned that Americans are being cautious and exceedingly choosy about what they are buying and where.

The impact of the retail sales report will likely extend beyond the immediate rate cut. The insights it contains about U.S. consumers will also factor into the Fed’s quarterly update to its Summary of Economic Projections, containing officials’ latest forecasts for the U.S. economy, inflation, and near-term interest rates.

The so-called dot plot , which charts the individual interest-rate projections of the seven members of the Fed’s board of governors and the 12 regional Fed presidents, is always closely watched as investors try to chart the Fed’s future actions.

Hollenhorst believes the median dot showing where rates will be at the end of 2024 should show “at least” 0.75 percentage-point of cuts, factoring in 0.25 point at each meeting through the end of the year. But it is likely that officials will leave the door open for more cuts in case data on the job market or consumer spending sour faster than expected.