Decision

Insulation or a heat pump: where to spend $1,000 first

Published 04 May 2026· 6 min read

Most NZ households making their first big winter-comfort spend reach for a heat pump. It is the visible, exciting upgrade. But for the bottom third of the housing stock, installing a heat pump in a poorly insulated home is like putting a faster engine in a car with the windows missing. You will go further on the same fuel, but you are still paying to heat the street.

The right order in most older NZ homes is: ceiling insulation, then draught-proofing, then a heat pump. Here is why, and roughly what each step costs and saves.

Step 1: Ceiling insulation

BRANZ research puts ceiling heat loss at 30-35% of the total in a typical uninsulated NZ home, the single biggest leak in the building. Modern R-3.6 to R-5.0 ceiling insulation cuts that loss roughly in half.

Cost: $1,500-3,000 for a typical NZ house, professionally installed. DIY with bulk batts is closer to $600-900 if you are comfortable in a roof space.
Savings: typically $300-500/year in heating cost depending on the region. Faster payback in Otago/Southland, slower in Auckland.
Grants: EECA's Warmer Kiwi Homes scheme currently covers 90% of the insulation cost for Community Services Card and SuperGold Combo cardholders, 80% for designated lower-income suburbs, and 50% for some middle-income areas. Owner-occupiers only, and the home must have been built before 2008. Always check eligibility before quoting.

Step 2: Draught proofing

A house with the doors and windows open loses heat at about 10x the rate of one sealed against the wind. Draughts under doors, around old sash windows, through the chimney of a decommissioned fireplace, and into the kitchen extract fan are doing exactly that on a smaller scale, all winter, every day.

Door bottom seals: $20-40 each, fitted in 10 minutes. Worth doing on every external door and any internal door that closes off heated rooms.
Window seal strips: $5-15 per window for self-adhesive foam or rubber strips. Effective on aluminium and timber.
Chimney balloon: $40-80. If you have an unused fireplace, this stops a continuous stack of warm air being sucked up the chimney. Easily $100-200/year saving on its own.
Range hood damper: a simple non-return flap on the duct stops cold outside air being drawn down into the kitchen overnight. $30-100.

Total spend for thorough draught-proofing of a typical NZ home: $200-500. Annual saving: $150-400. This is the single highest-return-per-dollar investment in winter comfort. Do it before doing anything else.

Step 3: Underfloor insulation (suspended floor homes)

BRANZ measures floor losses at around 10-14% of total heat loss in an uninsulated suspended-floor villa. Adding R-1.4 to R-2.5 underfloor insulation halves that and removes the worst of the cold-floors discomfort.

Cost: $1,500-3,500 professionally installed. The Warmer Kiwi Homes grant covers this too.
Savings: typically $150-250/year. Slower payback than ceiling but still good.
Bonus: a polythene ground vapour barrier laid at the same time massively reduces ground-source moisture rising into the building. See the damp homes article.

Step 4: A heat pump

Now that the building is holding heat, a heat pump turns each kWh of electricity into 3-5 kWh of room heat. In a leaky building it does the same thing, but the heat falls out of the building faster than the unit can replace it, so your hourly running cost is much higher and your bill is much higher.

Cost: $2,500-4,500 supply and install for a 5-7 kW living-room unit, more for a multi-split system across multiple rooms.
Savings vs plug-in heater: huge, see the heat pump running cost article. Typically 60-70% reduction in heating cost.
Savings vs a wood burner: close to neutral, see the comparison article. The cooling and air-quality wins matter more than the cost.

Step 5: Double glazing

The most photogenic upgrade and almost always the worst value per dollar. Double glazing reduces heat loss through the glass by 50-60%, but glass is rarely the biggest leak in a house once ceilings and draughts are dealt with. Costs $800-2,000 per window installed. Payback is typically 15-25 years on energy alone, although the comfort and condensation improvements are real.

Window film and good thick curtains floor-to-ceiling get you 60-70% of the benefit at 5% of the cost.

If you only have $1,000

Spend it in this order until it runs out:

$200-400 on door seals, window strips, and chimney balloon. Done in a weekend, biggest comfort win of the lot.
$400-600 on lined floor-to-ceiling curtains for the rooms you spend most time in.
Whatever is left applied as a deposit toward ceiling insulation, which is typically much cheaper than people expect once Warmer Kiwi Homes is factored in.

A heat pump is excellent. It just is not the right first dollar for most older NZ homes. Do the plumbing of the building first.

To stress-test your assumptions, plug your current setup into the NZ Power Bill Calculator and add a heat pump. The savings vs a plug-in heater will look enormous. Then think about how much of that saving evaporates if the room cannot hold the heat.