How Much Does a Tankless Water Heater Cost in Australia?

Last updated on February 3, 2026

Quick Answer

In Australia, the typical cost of a tankless water heater ranges from $1,500 to $4,500 for a standard supply and installation. Premium systems or complex electric conversions can increase the overall price of tankless water heater projects to $8,500+.

The final investment depends on system type (gas or electric), household hot water demand, installation complexity, and any required electrical or gas upgrades.

In Australia where close to 15%–30% of your total energy bills go into heating water, it’s easy to see why most of us are ditching the traditional storage hot water tank and embracing a tankless water heater.

These on-demand units are lean, mean, energy-saving machines because they only fire up when you actually turn on a tap. You won’t be stuck paying to keep 300 litres of water piping hot while you’re at work or fast asleep.

It sounds like a total win, but you must factor in the instant water heater price in Australia, and consider if the savings really add up.

In this tankless water heater pricing guide, we will walk you through the costs, what affects them, and what to expect before you decide, so you can always make your decision confidently.

Understanding Tankless Water Heater Costs in Australia

A tankless water heater(often called a “continuous flow” or “instant” system) does the opposite of a traditional storage tank by heating water only when you turn it on, instead of storing volumes of pre-heated water.

Since it must heat water from a cold “inlet” temperature to a steaming 50°C or 60°C in seconds, the internal technology is far more advanced than a standard tank. This is why the initial cost of a tankless water heater hardware is usually higher.

The final amount you pay for your tankless water heater includes the following:

The Hardware Unit: Choosing between leading brands like Rinnai, Rheem, or Bosch.

Licensed Plumbing Labour: Including the installation of mandatory tempering valves to prevent scalding.
Licensed Electrical Work: Necessary for gas unit igniters or heavy-duty dedicated circuits for electric models.
System Commissioning: Ensuring the gas pressure or electrical load is correctly calibrated.
Disposal: Professional removal and recycling of your old, bulky storage system.

Average Tankless Water Heater Price in Australia

Setting realistic expectations is key. While you might see a unit on sale for $850, the tankless hot water system cost once it’s on your wall is a different story.

Here’s what most Australian homeowners actually pay once everything’s done.

🟩 Entry-level systems ($1,200 – $1,800 installed): This suits a simple, like-for-like swap. Think about replacing an older gas instant unit with a new one. No major pipe changes. No electrical surprises. Clean and straightforward.

🟩 Mid-range systems ($2,500 – $4,500 installed): This is the most common range for 3–4 bedroom homes. It often includes small pipe upgrades, an added electrical point, or basic venting work. Nothing extreme, but more than a straight swap.

🟩 Premium or complex systems ($5,000 – $8,500+ installed): These jobs are bigger. Converting from an internal electric tank to an external gas unit. Moving the system to a new location. Adding three-phase power. More labour. More materials. More checks.

Instant water heater prices vary because no two homes are set up the same.

Gas supply, electrical capacity, plumbing condition, and even access to the installation spot all matter. That’s why getting a proper quote before committing isn’t just helpful. It’s essential.

How Much Does an Electric Tankless Water Heater Cost in Australia?

In Australia, the cost of a tankless water heater powered by electricity typically ranges from $1,500 to $5,000 fully installed.

The hardware alone usually costs between $750 and $2,200 as follows:

Small / Under-Sink Tankless Water Heater: $750 – $1,100 (Single-phase): These point-of-use units are designed for single taps or small bathrooms. Lower cost reflects limited capacity, simple installation, and minimal electrical requirements.
Whole-Home Tankless Water Heater: $1,400 – $2,200 (Three-phase): Designed to supply multiple showers and taps simultaneously. The higher cost comes from larger heating elements, the need for three-phase power, and potential electrical upgrades. Installation time and labour are also greater.

How Much Does a Gas Tankless Water Heater Cost in Australia?

In 2026, the cost of a tankless water heater powered by gas typically ranges from $1,800 to $4,500 fully installed. Your total tankless hot water system cost comes down to the unit’s flow rate, energy efficiency, and any gas line or venting upgrades.

Here is what you should expect:

16L – 20L Units:➡ $800 – $1,100: These are suitable for 1-bathroom homes or apartments. Lower price reflects smaller heating capacity and minimal installation adjustments.
26L Units:➡ $1,100 – $1,700: These are the standard for 2-bathroom family homes. These units offer higher flow rates, which can slightly increase installation complexity and on demand water heater cost.
32L Units:➡ $1,800 – $2,700: Designed for large households with 3+ bathrooms or high-flow showers. Higher costs are due to larger heating elements, bigger gas valves, and sometimes pipe upgrades.

Tankless Water Heater Installation Cost Explained

In Australia, the labour and materials for a professional installation typically range from $600 to $3,000.

This is separate from the purchase price of the unit. The final cost is determined by whether you are performing a simple “like-for-like” replacement or a complex fuel conversion.

Standard Replacement (Like-for-Like)

Average Cost: $600 – $1,200. If you are replacing an old tankless unit with a new one in the same location, the installation is straightforward. This covers:

Disconnecting and disposing of the old unit.
Mounting the new system and connecting to existing gas, water, and power points.
Minor pipework adjustments and commissioning the system.

Conversion from Storage Tank to Tankless

Average Cost: $1,500 – $3,000+ Switching from a traditional storage tank to a tankless system is more labour-intensive. Because tankless units require much higher energy bursts, your current infrastructure likely needs an upgrade:

Gas Upgrades: Standard tanks use small gas pipes. Tankless units often require a 20mm or 25mm gas line upgrade from the meter to the unit to ensure the burners get enough fuel.
Electrical Upgrades: Electric tankless units require a dedicated high-amperage circuit. If you’re installing a whole-home unit, an electrician may need to upgrade your home to three-phase power, which alone can cost $1,500–$2,500.
Plumbing Relocation: Unlike tanks that sit on the ground, tankless units are wall-mounted. This requires extending and rerouting water and gas pipes to the new mounting position.

Mandatory Compliance Costs

In Australia, you cannot DIY a hot water installation. Your total on-demand water heater cost will always include:

Licensed Labour: Plumbers and gas fitters typically charge $100 – $150 per hour.
Tempering Valves: Mandatory by law to limit water temperature to 50°C at the tap to prevent scalding (approx. $150 – $250 including labour).
Certificates of Compliance: Necessary for home insurance and ensuring the installation meets Australian Standards (AS/NZS 3500.4).

Ongoing Operating and Maintenance Costs

The total cost of a tankless water heater doesn’t end at installation. While these systems are highly efficient, understanding the annual energy impact and the specialised servicing required is key to calculating your long-term ROI.

Annual Running Costs: Gas vs. Electric

In Australia, the on-demand water heater cost varies significantly depending on your fuel source and local tariffs. Because tankless units eliminate the “standby heat loss” of storage tanks, they are generally 20% to 30% cheaper to run than their tank counterparts.

Natural Gas (6-7 Star): $250 – $550 per year. Gas remains the most cost-effective way to power a tankless system in most metro areas.
Electric (Whole-Home): $600 – $1,200 per year. Electricity is more expensive per unit of energy than gas. However, if you have a solar system, you can significantly offset this cost by using your own generated power during the day.
LPG (Bottled Gas): $400 – $750 per year. While more expensive than natural gas, LPG is often still cheaper than running a whole-home electric unit at peak grid rates.

Maintenance and Servicing Requirements

To ensure your system reaches its 20-year potential, periodic maintenance is required. In Australia, a professional service for a tankless unit typically costs between $150 and $350.

Flushing/Descaling: This is the most critical maintenance task. Over time, calcium and magnesium (hard water) build up inside the narrow heat exchanger. A professional flush every 1–2 years removes this scale to maintain efficiency and prevent the heat exchanger from failing.
Filter Cleaning: Most units have a small filter on the cold-water inlet that needs to be cleared of debris periodically to maintain water pressure.
Component Inspection: For gas units, a technician will check the burner, fan, and gas pressure to ensure clean combustion and prevent “carboning up,” which can lead to expensive repairs.

Repair Costs

While tankless units are durable, their complex electronics mean that if a part fails, the price of tankless water heater repairs can be higher than a simple tank:

Minor Repairs (Sensors/Fuses): $150 – $300.
Major Repairs (Circuit Boards/Heat Exchangers): $600 – $1,300.

By budgeting for a biennial service, you can usually avoid these major repairs and keep your tankless hot water system cost predictable over the life of the unit.

Tankless vs Tank Water Heater Cost Comparison

Choosing between a tankless vs storage tank hot water heater is essentially a choice between lower upfront costs and long-term operational savings.

A storage tank works by heating and holding a large volume of water (usually 135L to 315L) at a constant temperature. This ensures hot water is ready immediately, but it leads to “standby heat loss” as the unit cycles on and off to keep the tank hot, even when no one is home.

In contrast, a tankless system skips the storage phase entirely. It uses high-powered gas burners or electric elements to flash-heat water only when a tap is opened.

While this advanced technology increases the instant water heater price, it eliminates the unnecessary energy waste and provides a virtually endless supply of hot water.

The following table provides a detailed comparison of tank vs tankless water heater 2026.

Feature	Tankless (Continuous Flow)	Storage Tank (Traditional)
Typical Purchase Price	$800 – $2,500	$400 – $1,800
Installed Price (Standard)	$1,500 – $4,500	$1,000 – $2,500
Complex Install/Conversion	$4,500 – $8,500+	$2,500 – $4,000
Average Lifespan	20 – 30 years	8 – 12 years
Energy Efficiency	85% – 98% (No standby loss)	60% – 65% (Standby loss)
Annual Running Cost (Gas)	$205 – $325	$415 – $475
Annual Running Cost (Elec)	$335 – $600	$435 – $1,200 (Peak tariff)
Maintenance Needs	Annual/Biennial Descaling	Anode replacement & flushing
Physical Footprint	Small, wall-mounted	Large, floor-standing
Hot Water Supply	Endless (limited by flow rate)	Limited by tank capacity

Factors That Can Increase or Reduce Your Final Cost

Why do quotes for the tankless hot water system cost vary so much?

Gas Availability: If you don’t have natural gas, you’ll need LPG bottles, which adds to the initial price of tankless water heater.
Electrical Capacity: If your switchboard is full, adding a new circuit for an on demand water heater cost adds $500+ in electrician fees.
Plumbing Condition: Older homes with galvanised pipes often need those pipes replaced to handle the pressure of a new tankless system.
Solar Pairing: You can reduce your on-demand water heater cost by using timed electric tankless units that run on “free” solar power during the day.

Is a Tankless Water Heater Worth It in Australia?

Deciding if a tankless system is “worth it” usually boils down to one thing: how much you hate running out of hot water. While the upfront cost of a tankless water heater can be a bit of a sting, the long-term payoff is actually pretty solid if you plan on staying in your home for more than a few years. It’s a classic case of paying more now to worry less later.

The Real-World ROI

For most Aussie households, you’re looking at a “payback” period of about 5 to 9 years. Here’s why the math usually checks out:

The “Double Life” Factor: A standard storage tank usually rusts out in 8 to 12 years. A decent tankless unit is built to last 20 years or more. You’re effectively skipping an entire replacement cycle.
Cutting the Energy Waste: Traditional tanks are constantly heating water while you sleep or work. Tankless units save that energy. That simple change can knock 25% to 30% off your water heating bill. For a busy family of four, that’s easily $200–$400 back in your pocket every year.

When Are Tankless Water Heaters Worth It?

You’re short on space: If you’re in a townhouse or apartment, reclaiming that big cupboard where the old tank used to sit is a massive win.
The morning “shower race”: If the third person in the shower always gets an icy surprise, the “endless” flow of a tankless unit is a life-changer.
You’ve got solar panels: If you have solar panels, an electric tankless unit is a great way to use your own power. Just a heads up though: since there’s no tank to store “pre-heated” water, you get the most value when you use the hot water while the sun is actually hitting your panels.

When Are Tankless Water Heaters Not Worth It?

It’s not for everyone. If you’re planning to sell the house in a year or two, you won’t live there long enough to see the energy savings cover the higher on demand water heater cost.

Also, if you live somewhere truly freezing (like the High Country or parts of Tassie), the “inlet” water can be so cold that a basic unit might struggle to keep the pressure high while hitting those steaming temperatures.

Final Thought

In 2026, a tankless water heater is a premium performance upgrade that pays dividends in comfort and durability rather than immediate cash savings.

While the upfront tankless hot water system cost is higher, you are investing in a unit that lasts twice as long as a standard tank and clears up significant space in your home.

For “forever homes,” it’s a smart play; for short-term rentals or quick flips, a cheap storage tank is often the more logical financial choice.

FAQs

How much money do you save with a tankless water heater?

You’ll likely shave about 25% to 35% off your water heating bills. Since there’s no big tank of water sitting there cooling down all night (what we call “standby loss”), you aren’t paying to heat water you aren’t using. For a typical family, that’s roughly $150 to $400 back in your pocket every year.

Why do tankless water heaters cost so much?

It’s the “muscle” inside. A tank heats water slowly with a small element, but a tankless unit has to flash-heat freezing water to 50°C in seconds. That requires massive burners or high-tech heat exchangers. Plus, because they draw so much power instantly, you often have to pay a plumber or sparky to upsize your gas pipes or electrical board just to handle the “burst” of energy.

How much does it cost to run a tankless water heater per month?

In 2026, most Aussies are spending between $25 and $50 a month on gas units. If you’re on a whole-home electric unit without solar, it can climb to $60–$90 because electricity is pricier per unit of energy. It’s still cheaper than a standard electric tank, but the “monthly” cost depends heavily on how long your teenagers spend in the shower!

Can you save costs on a tankless water heater with solar?

Yes, if you’ve got solar panels. But there’s a catch. Unlike a tank, which acts like a battery (heating water at noon to use at 8 PM), a tankless unit only uses your “free” solar power while the tap is actually running. If you shower at 6 AM or 9 PM, you’ll be pulling expensive power from the grid. It’s a great way to go gas-free, but you get the best ROI if you shift things like laundry or daytime showers to when the sun is peaking.

How long does it take for a tankless water heater to pay for itself?

Expect a “break-even” point of about 6 to 10 years. While that sounds like a long time, remember that these units usually live for 20+ years. A standard tank often dies and needs a full (expensive) replacement at year 10, right when the tankless unit is just starting to save you real money.

Which is cheaper, a tank or a tankless water heater?

A tank is cheaper today: If your budget is tight right now, a standard storage tank is the winner.
Tankless is cheaper over 20 years: When you factor in the lower monthly bills and the fact that you won’t have to buy a replacement unit in a decade, tankless wins the long game.