Gas vs Electric vs Heat Pump Hot Water: Which Is Best for a Melbourne Home?

Why this is the question of 2026

Victoria is phasing out new residential gas connections, energy prices keep moving, and rebates have made heat pumps the cheapest long-term option for many homes. Here's how to choose without the marketing spin.

Factor	Gas Continuous	Electric Storage	Heat Pump
Upfront (fitted)	$2,200–$3,400	$1,650–$2,800	$3,800–$5,800
After rebates	n/a	n/a	$1,000–$1,800
Annual running	$350–$650	$700–$1,200	$120–$300
Lifespan	15–20 yrs	8–15 yrs	10–15 yrs
Hot water on demand	Yes	Tank size	Tank size
Best for	Existing gas, large families	Off-peak, small homes	Most new installs

What we'd install in our own family's home

New build or full reno: heat pump every time. Lowest running cost, biggest rebates, no gas dependency.

Existing gas, big family, small footprint: gas continuous flow — endless hot water, compact.

Apartment or small home with off-peak: small electric storage is hard to beat for simplicity.

The honest downsides (no one tells you)

Heat pumps make a fan noise — placement matters near bedrooms.

Gas continuous flow needs adequate gas line size — a $300–$700 upgrade on older homes.

Electric storage is cheap to install but the most expensive to run on day rates.

### FAQ

Do I have to switch off gas?

No — but if your gas heater fails, it's the right time to evaluate a heat pump with rebates.

How big a heat pump do I need?

170L for 1–2 people, 220L for 3–4, 280L+ for 5+ or high-use households.

### Call to action

Want a side-by-side quote for your home? We'll send all three options with rebates already calculated.