As featured in The Urban Developer

It was a fantastic moment for Michael Drage, founder of Uncommon Living, to sit down with The Urban Developer and talk through our low-cost, midrise modular homes pilot taking shape in Marrickville. Michael was genuinely excited for the opportunity to walk one of the industry’s most respected publications through the thinking behind the project — alongside Sky Planning founder Melissa Neighbour, our planner, whose expertise has been central to bringing this Inner West pilot to life.

The feature covers the first site at 50 Harnett Street, Marrickville, and the broader vision for a scalable, site-responsive approach to affordable, sustainable housing across Sydney and beyond.

Read the original article: The Urban Developer – Low-Cost, Midrise Modular Homes Pilot Targets Sydney’s Inner West

Note: This article sits behind The Urban Developer’s paywall, so the full feature is reproduced below as screenshots (so it can be read in full) followed by the complete text.

The Feature, As Published

In 2020, researchers at Curtin University published findings that should have prompted a national conversation about Australian housing quality. They found that residential buildings in Australia were performing at 20–80% below their as-designed energy rating.

Not 5% below. Not 10%. Twenty to eighty percent.

A home designed and certified to achieve 7 NatHERS stars might be operating as a 4-star building. The occupants don’t know. The certifier who issued the rating doesn’t know. The builder who constructed it almost certainly doesn’t know. The gap between what a building was designed to do and what it actually does once built has a name — the performance gap — and in Australian residential construction, it is vast.

Understanding why it exists, and what closes it, is the most important conversation the Australian building industry isn’t having.

What Home Performance Gap Actually Means

When a NatHERS assessor models a home, they are simulating its theoretical energy performance under idealised conditions. The model assumes a specific set of inputs: the geometry and orientation of the building, the specification of insulation and glazing, and a fixed infiltration rate.

That last input — infiltration — is where the model diverges most sharply from reality. NatHERS assumes an air infiltration rate of 10–12 air changes per hour at 50 Pascals (ACH50). It assumes this regardless of how the building is actually constructed, because the model has no way of knowing. Airtightness is not tested or verified at any point in the standard Australian building approval process.

What that means in practice is that every home in Australia is rated against the same infiltration assumption — whether it’s been sealed meticulously or not at all. The rating cannot reward good work or penalise poor work in this regard.

We recently tested newly completed homes in Canberra. Several were sitting above 20 ACH50 — more than twice the infiltration rate the NatHERS model had assumed. These homes would be operating at less than half their rated thermal performance as a result of this factor alone.

This is not a fringe finding. It is consistent with what building scientists have been measuring in Australian homes for years.

The Four Causes

The performance gap in Australian residential construction has four primary drivers. They are well understood. What’s less understood is how structurally difficult they are to solve within the current delivery model.

1. Airtightness

As established above, this is the dominant factor. Uncontrolled air infiltration accounts for 25–40% of total heating and cooling load in a typical Australian home. Every air change above the modelled assumption represents real energy loss and real comfort degradation. The problem is that airtightness requires every junction, penetration, and transition in the building envelope to be sealed correctly — and in site-built construction, that responsibility is split across multiple trades with no single point of accountability.

1. Thermal bridging

NatHERS does not model thermal bridging in meaningful detail. Structural elements that conduct heat through the insulation layer — steel studs, window reveals, slab edges, roof-to-wall junctions — can reduce the effective thermal performance of a wall assembly by 20–40% compared to its nominal R-value. A builder who doesn’t address thermal bridges produces a wall that performs significantly below specification, and the rating certificate doesn’t capture this.

1. Construction quality and trade sequencing

Even when a project is well specified, site conditions work against consistent quality. Weather events delay work. Trades follow each other in sequence, each one potentially compromising what the previous trade installed. An electrician cuts through a vapour membrane. A window installer leaves a gap at the sill. A plumber penetrates the top plate without sealing it. None of these are deliberate failures — they’re the predictable outcome of a fragmented delivery process where no single person owns the envelope performance.

1. The verification gap

In standard Australian construction, there is no requirement to verify that the as-built performance matches the as-designed performance. A NatHERS certificate is issued on the basis of drawings and specifications — not measurements of the completed building. The certificate is never updated to reflect what was actually built.

This is the fundamental accountability gap. The person who issues the rating and the person who builds the building operate in different systems, with no connecting verification step.

Why DfMA Changes the Equation

Design for Manufacturing and Assembly (DfMA) is the methodology that underpins the Net Zero Plus system. It is not simply a construction technique — it is a quality management philosophy applied to building delivery.

In a DfMA process, every design decision is made with manufacturing in mind from the outset. Components are designed to be fabricated in a controlled factory environment, assembled with consistent processes, and installed on site according to documented procedures. The goal is to eliminate the sources of variability that produce the performance gap.

Here is what that means in practice for airtightness specifically:

• Factory assembly: Wall panels are assembled in a controlled environment. No weather delays. No competing trades. The airtight membrane is installed, taped, and inspected by a single team before the panel leaves the factory floor.
• Window installation: High-performance windows are set into panels in the factory, not on site. The seal between frame and panel is consistent and verified before delivery.
• Electrical conduits: Pre-run in the factory within the panel structure, eliminating the need for electricians to penetrate the membrane on site.
• Sequential delivery: Panels arrive numbered and sequenced. The connections between panels — the joints that are most susceptible to air leakage in site-built construction — are sealed according to a documented procedure.

The target for a Net Zero Plus system, constructed per specification, is 1 ACH50 or below. This is between ten and twenty times better than the infiltration rate NatHERS assumes in its modelling.

Given the precision of the DfMA process, the as-built building should perform at or better than the as-designed rating. That’s the goal, and for high-performance prefabricated structures, the evidence supports it.

The Verification Step That Changes Everything

One of the most important things Net Zero Plus does is test airtightness on completed installations with a blower door. The test takes approximately two hours. It pressurises the building to 50 Pascals and measures the rate of air escaping through the envelope.

This single step closes the verification gap that exists in standard Australian construction. It converts a theoretical rating into a measured outcome. It creates accountability — for the system, for the installation, and for the performance claim.

If the result doesn’t meet the target, it tells us exactly that. Gaps can be found and addressed. The building can be tested again. The final airtightness figure becomes part of the project record.

This is what ‘performance measured, not assumed’ actually means in practice.

What This Means for Buyers, Builders and Developers

The performance gap has different implications depending on where you sit in the building process.

For homeowners and owner-builders, it means the energy rating on your drawings is not a guarantee of how your home will perform. If you want to know what your building will actually do, you need to specify airtightness as a design target, test it on completion, and choose a construction system that makes it achievable.

For builders, it means that the quality of your envelope work is currently invisible — not rewarded by the certification system and not penalised when it falls short. That’s a commercial reality today. It will not be a commercial reality indefinitely. As energy disclosure and building performance standards tighten, the builders who have been doing this properly will be differentiated from those who haven’t.

For developers, the performance gap is a risk that sits outside the balance sheet. A building that performs at half its rated performance creates unhappy occupants, higher running costs, and reputational exposure. A verified high-performance building creates the opposite: measurable outcomes that support premium positioning, council confidence, and long-term asset value.

The Takeaway

The performance gap is not a secret. The research has been published. The physics are well understood. The fix is not technically complex.

What it requires is a delivery system that treats airtightness and thermal performance as engineered outcomes rather than assumed ones — and a verification step that confirms the building performs as designed.

Until the Australian building industry normalises that step, the gap will persist. At Net Zero Plus, we’ve built it into the process from the start. Speak with a Net Zero Plus expert today.

Most Australian houses were not designed with health in mind. They were designed to meet a minimum energy rating and a planning envelope, with the rest of the performance decisions defaulting to whatever was cheapest at the time. For most of the last fifty years, the consequences of that approach were invisible — a bit of condensation here, a slightly mouldy bathroom there, draughts that everyone learned to live with. Today, the conversation around healthy homes is changing as Australians become more aware of how indoor environments affect comfort, wellbeing and long-term health.

That is changing fast. Bushfire smoke, increasing summer humidity, growing awareness of indoor pollutants, and the post-pandemic shift to spending more time at home have all converged.

Healthy homes — homes built specifically for the air inside, not just the temperature — are moving from a niche concern to a serious selling point.

For builders and developers, this is one of the few clear commercial differentiators left in a market where most new builds look broadly identical. Done right, it is also one of the easiest to deliver.

Why this is moving from niche to mainstream

Australians spend around 90% of their time indoors. The air they breathe inside is generally worse than the air they breathe outside, and there are reasonable reasons to think it is getting worse over time:

• Australian bushfire seasons now produce sustained periods where outdoor PM2.5 exceeds WHO limits, and standard homes have no way to filter incoming air.
• Modern building materials off-gas more volatile organic compounds than the timber-and-plaster homes of fifty years ago.
• Mould-related insurance claims have risen sharply as condensation problems compound in poorly ventilated homes.
• The post-pandemic generation of home buyers is materially more interested in how their home affects their health than the previous one.

This is not a regulatory pressure. The Australian National Construction Code has not yet caught up with healthy-home thinking the way Europe’s has. But the market is moving anyway — quietly, in the design choices being requested by serious buyers, and in the developers who are starting to advertise indoor air quality alongside square metres and bedrooms.

What Healthy Homes Actually Mean in Building Terms

“Healthy home” sounds soft until you reduce it to the building-physics decisions that produce it. There are four:

Air change rate. A healthy home needs continuous fresh air. Around 0.3–0.5 air changes per hour of fresh outdoor air is typical, depending on occupancy. A standard Australian home cannot control this — it leaks unpredictably depending on wind and temperature. A controlled-ventilation home does control it.

Filtration. When outdoor air is bad — bushfire smoke, pollen, traffic pollution — a healthy home should be able to filter it before it gets inside. This requires a sealed building envelope and a mechanical ventilation system with appropriate filter ratings (typically F7 to F9).

Humidity management. Indoor relative humidity above 60% or below 30% increases health risk. Above 60% drives mould and dust mite growth. Below 30% causes respiratory dryness, increased viral transmission, and material cracking. A healthy home holds the indoor humidity range steady, mostly between 40% and 55%.

Material toxicity. What the building is made of matters. Off-gassing from low-grade adhesives, formaldehyde from particleboard, and chemical treatments in cheap softwood can all degrade indoor air quality for years after construction.

These four are interconnected. You cannot deliver any one of them well without managing the others. That is what makes healthy homes a building-system problem rather than a checklist.

What ventilation actually does

The single biggest difference between a standard Australian home and a healthy one is how air moves through it. In a standard home, air moves in and out through gaps and cracks — uncontrolled, unfiltered, and uneven. Sometimes it moves too much (draughts in winter), sometimes too little (stale bedroom air, bathroom condensation, kitchen smells lingering for hours).

A heat recovery ventilation (HRV) system fixes this by mechanically supplying filtered fresh air to the living spaces while extracting stale air from the wet areas, in a continuous balanced flow. The “heat recovery” part means the outgoing stale air pre-conditions the incoming fresh air, so you do not throw away the energy you used to heat or cool the building.

Crucially, an HRV system only works properly in a building that is airtight enough to contain it. If air is leaking in and out through cracks, the mechanical ventilation cannot hold its setpoint and the filtration is wasted. This is why healthy homes and Passive House standards are so closely linked — the airtightness target that defines Passive House is also what makes mechanical ventilation effective.

In our experience, HRV is the single design decision that homeowners notice most after move-in. The air smells different. Bathrooms dry out properly. Kitchen smells vent in minutes, not hours. People sleep better. It is a real, daily quality-of-life upgrade.

Materials matter more than most clients realise

The healthiest envelope still produces an unhealthy interior if the materials inside it are wrong. The most common offenders in Australian construction are:

• Engineered wood products with high formaldehyde emissions. Particleboard and MDF in cabinetry, flooring substrates and joinery off-gas formaldehyde for years.
• Vinyl flooring and PVC components with phthalate plasticisers.
• Conventional softwood treatments containing chemicals not permitted in European construction.
• Low-grade adhesives and sealants specified for cost rather than emissions profile.

The European prefab system Net Zero Plus brings to Australia avoids most of these by default. The structural timber is KVH — kiln-dried, strength-graded softwood that is durable and low-toxicity. Wood fibre insulation is available as an option, which acts as a long-term carbon sink rather than an air quality problem. The materials chain is documented end-to-end because European regulation requires it.

For builders, this matters because once a material is in a wall, taking it out is expensive. The healthy-home decisions need to be made at specification, not retrofit.

The commercial case for builders and developers

For developers, healthy-home positioning supports a clear premium. Buyers who are looking for it will pay for it, and the cohort doing so is growing fast — particularly families with young children, asthmatic occupants, and the wave of post-pandemic buyers who are now willing to pay for genuine performance differentiators.

For builders, healthy-home capability is becoming a real reputational asset. The builders who can demonstrate that they understand airtightness, ventilation, humidity and material choice are increasingly the ones being asked to quote on the higher-margin custom and Passive House work. It is one of the clearest paths out of the commodified end of the residential market.

For both audiences, healthy-home performance also reduces warranty risk. The most expensive warranty claims in Australian residential construction are mould, condensation and indoor air quality complaints. Building these out from day one — rather than litigating them after handover — is the cheaper path on every spreadsheet we have seen.

How prefab makes healthy homes easier to deliver

The same factory precision that makes Passive House achievable also makes healthy homes easier. Specifically:

• The airtight envelope is built into the panel, not added on site, so mechanical ventilation actually works.
• Material choices are made once at specification and applied consistently across every panel — no on-site substitution.
• Pre-installed conduits in the walls mean the HRV ducting can be planned and routed cleanly rather than retrofitted.
• Wall and roof assemblies are detailed to prevent condensation within the structure itself, removing the hidden-mould risk that develops inside on-site walls.

We are not the only way to deliver a healthy home in Australia. But we are one of the most reliable, because most of the decisions that determine the health performance of the finished building are made in the factory, before any panel is shipped.

Frequently asked questions

Is “healthy home” a real standard or just marketing?

There is no single Australian certification yet, but the building-physics measures are concrete: air change rate, filtration efficiency, humidity range, material emissions. International frameworks like the Active House and WELL Building standards formalise these. Passive House addresses most of them as a side effect of its energy targets.

Does a healthy home cost more?

Up front, modestly — typically a few percent more on a build, depending on the baseline you compare against. Over a ten-year ownership period, lower energy use, fewer mould-related repairs, and lower asthma medication and GP costs usually close the gap.

Can a healthy home be 8+ star?

Yes. The two go together. The same airtight, well-insulated envelope that makes a home healthy also makes it efficient. Most of our builds achieve 8+ stars as a default before any explicit health add-ons.

Will I notice the difference after I move in?

Most people notice within the first week. Stable temperature, clean-smelling air, dry bathrooms, quiet rooms. Almost everyone notices it in the first winter.

Want to position your next project around healthy homes, not just square metres? Get a free quote within 48 hours — or read Building for Health and Climate for the longer-form version of the climate side of this story. https://netzeroplus.com.au/developers/