How Much Does a New Heating and Cooling System Cost?
Investing in a new heating and cooling system is a significant decision for homeowners, and the cost of such systems can vary considerably. Several factors come into play when determining the overall expense, and understanding these elements can help individuals make informed choices tailored to their specific needs and budget.
In this comprehensive guide, we will delve into the various factors that influence the cost of new heating and evaporative cooling units.
System Type
The type of heating and cooling system you choose plays a crucial role in determining the overall cost. Common systems include:
Furnaces
Heat pumps
Ductless mini-split systems
Each has its own set of advantages, disadvantages, and associated costs. For instance, a high-efficiency heat pump may have a higher initial cost but can provide substantial energy savings over time, impacting both the upfront expense and long-term operating costs.
In 2026, Australian homeowners can typically expect installed costs by system type to range as follows:
Single split systems typically cost around $1,800 to $4,800 including supply and professional installation. Multi-head split systems range from $4,200 to $8,000, with each additional indoor unit adding $1,000–$1,500 to the total. Ducted reverse-cycle systems generally run $12,000 to $17,000, though complex installations can exceed $20,000. Evaporative cooling systems cost $3,000 to $6,000 for complete ducted installations, with portable units starting from around $50–$300.
Size of the System
The size of the heating and cooling system needed for a home is a critical factor. An undersized system may struggle to maintain the desired temperature, leading to inefficiency and increased energy consumption.
Contrarily, an oversized system may cycle on and off frequently, causing unnecessary wear and tear and higher energy bills. HVAC professionals conduct load calculations to determine the appropriate size for a system based on factors such as the home's square footage, insulation, and local climate.
Energy Efficiency Ratings
Energy efficiency is a key consideration when evaluating the cost of a new heating and cooling system. More energy-efficient units typically have a higher upfront cost but can lower energy bills over the system's lifespan.
Look for systems with high Seasonal Energy Efficiency Ratio (SEER) ratings for evaporative coolers and Heating Seasonal Performance Factor (HSPF) ratings for heat pumps. These ratings indicate the system's efficiency in cooling or heating, respectively.
Higher efficiency models can cost $800–$1,500 more upfront but may save thousands over 10+ years of operation.
Brand and Model
The brand and model of the heating and cooling system also impact its cost. Established and reputable brands often come with a higher price tag, reflecting their reliability, advanced technology, and warranty coverage.
While it may be tempting to opt for a lower-cost unit, it's crucial to consider the long-term reliability and performance, as well as the availability of replacement parts and services.
Installation Costs
The installation process can significantly affect the overall cost of a new heating and cooling system. Factors such as the complexity of the installation, the need for ductwork modifications, and the type of system being installed all contribute to the installation cost.
Additionally, the location of the installation and accessibility for the HVAC technicians can influence labour costs.
In Australia, licensed HVAC technicians typically charge between $50 and $150 per hour, with most residential projects averaging $80–$110 per hour (including GST). Standard call-out fees range from $75–$250, and split system labour alone can cost $600–$1,500+ depending on complexity. Electrical upgrades, which many modern systems require for RCD protection and dedicated circuits, can typically add $800–$2,200 to your final invoice.
Ductwork
The condition and design of existing ductwork, if applicable, are crucial considerations. If the ductwork is outdated, leaky, or incompatible with the new system, modifications or replacements may be necessary. This can add to the overall cost, but it is essential for ensuring the optimal performance of the new system and maximising energy efficiency.
Replacing old, poorly insulated ductwork with modern R1.5 or R2.0 rated insulated ducts can typically cost $3,000–$7,500, depending on the number of outlets and layout complexity.
Geographic Location
The geographic location of a home can impact the cost of a new heating and evaporative cooling unit. Local climate conditions, building codes, and regulations may influence the type of system recommended and the installation requirements.
Additionally, regional differences in labour and material costs can contribute to variations in the overall expense.
Homeowners in Melbourne and Geelong can typically expect costs slightly above the national average, with installed split systems ranging from $2,000–$3,000 and ducted systems from $12,000–$20,000, reflecting regional labour rates and service availability.
Additional Features and Accessories
Some heating and cooling systems come with additional features and accessories that can enhance comfort and convenience but also add to the cost. Examples include programmable thermostats, zoning systems, air purifiers, and humidity control features. While these add-ons can improve overall system performance, it's important to weigh their benefits against the associated costs.
Smart zoning controls (e.g., MyAir or AirTouch) can add $2,000–$4,500, enabling individual room temperature management via smartphone — particularly valuable for larger homes.
Government Rebates and Incentives
Government support for heating and cooling upgrades is one of the most overlooked savings opportunities.
In Victoria, the Energy Upgrade Agreement (VEU) programme offers rebates of $900–$3,000 for high-efficiency split systems, and up to$8,000 when replacing old gas ducted heating with modern reverse-cycle electric systems. NSW residents may qualify for the Energy Savings Scheme (ESS), providing $550–$1,000 discounts on qualifying units. South Australia's REPS program and ACT's Home Energy Support Program (HESP) also offer state-based incentives, with some low-income households eligible for rebates covering up to 50% of installation costs.
To maximise your savings, check with your state's energy regulator and request quotes from accredited VEU, ESS, or REPS providers — many incorporate discounts directly into your final quote.
When to Repair vs. Replace
Homeowners often ask whether to repair an ageing system or invest in replacement. The industry's "50% Rule" applies: if your system is over 10 years old and a repair quote exceeds 50% of the cost of a new unit, replacement is typically the better long-term investment.
A 2026 model offers a fresh 5-year manufacturer warranty, significantly better energy efficiency, and compatibility with modern controls. Removing old systems requires licensed technicians to safely decommission refrigerant gases under ARC regulations, typically costing $200–$500 for split systems and $500–$1,200 for ducted units. This removal cost, combined with one major repair, often approaches the price of an entry-level replacement system.
Ensure Proper Maintenance With Gas Safe
The cost of a new heating and cooling system is influenced by a combination of factors, including the type of system, size, energy efficiency, brand, installation requirements, ductwork, geographic location, and additional features.
Whether you are looking to service split system evaporative cooling or ducted heating, Gas Safe Heating, Cooling & Plumbing can help.
Contact us today to determine the best heating and evaporative cooling type for you. We offer service on most major brands and are experts in heating and cooling systems.