An instantaneous hot water system is a solid choice for many Australian homes, particularly if you have a smaller household, are short on space, or are already connected to gas. However, they are not always the right fit, especially when multiple people need hot water at the same time or the electrical setup does not support it.
You might hear these systems called continuous flow or tankless, but they are the same thing. Most of the decision comes down to how your household actually uses hot water, what connections you have available, and whether the system can be sized to match your daily demand.
An instantaneous hot water system heats water on demand as it flows through the unit. There is no storage tank keeping water hot around the clock. When you turn on a tap, cold water passes through the unit and is heated by a gas flame or an electric element before reaching the outlet.
Gas continuous flow water heaters are the most common type for whole-home use. You can also get electric instantaneous water heaters, but whole-home electric models typically require three-phase power. Single-phase electric units are generally suited to smaller point-of-use applications such as a single bathroom or kitchen sink.
Because there is no insulated storage tank storing water and maintaining temperature when nobody is using it, continuous-flow systems avoid the standby heat loss associated with traditional storage water heaters.
Choosing the right hot water system starts with household size and usage patterns. A couple using one bathroom has very different hot water demand from a family of five with back-to-back morning showers. Continuous flow suits homes where demand is steady rather than simultaneous.
Flow rate matters more than tank size with instantaneous systems. Most units deliver between 10 and 32 litres per minute. If someone is showering while the dishwasher runs and someone else is at the kitchen tap, a single unit may struggle to maintain temperature and pressure across multiple hot water outlets. A right-sized system matched to your actual demand avoids this.
Gas hot water systems running on natural gas or LPG are straightforward for continuous flow. Electric continuous-flow systems for a whole home typically require three-phase power, which many older homes do not have. If your home only has single-phase power, an electric instantaneous unit is generally limited to serving a single outlet, such as a bathroom or kitchen sink, rather than the whole house. Worth checking with an electrician or installer before making any decisions.
Continuous flow hot water heaters only heat water when you need it, so they avoid the running costs of keeping a full insulated tank at temperature. But an electric storage water heater on an off-peak tariff can still be cheaper to run than gas or electric continuous flow on a continuous tariff. Running costs depend on your energy source, tariff structure and how much hot water your household actually uses. Do your own research on local tariff options, or ask your installer to compare them.
Instantaneous systems are compact and wall-mounted, making them practical for apartments, small homes, and garages where a bulky storage tank would not fit. Gas units need appropriate clearances and usually work best installed at ground level on an external wall.
Climate affects how hard the unit has to work. In colder parts of Australia with long, cold nights, less mid-year sun and low incoming water temperature, the system needs a bigger temperature rise to get your water hot. That extra effort reduces the effective flow rate, which means you may need a larger unit than you would in a warmer area. If you are in a particularly cold location, it is worth considering whether a different system type would better handle those conditions.
The unit heats water on demand, but the hot water still has to travel through your pipes to reach the tap. Pipe run distance, low-flow fixtures and activation thresholds all affect how quickly it arrives. This applies to any hot water system, not just continuous flow.
If your household runs multiple hot water outlets simultaneously every morning, a large storage water heater may handle that demand more reliably. A heat pump water heater draws heat from the surrounding air and can use up to 75 percent less electricity than a conventional electric storage water heater, making it highly efficient for lower running costs long term. Solar hot water systems can cut energy use by at least 60 percent compared to conventional gas or electric hot water systems, particularly in areas with strong mid-year sun and less reliance on boosting.
Heat pump and solar hot water units are eligible for government incentives in most states, including STCs and state-level programs. If reducing greenhouse gas emissions and energy bills is a priority, those alternatives are worth comparing. A solar PV system paired with a heat pump or electric storage system can further reduce running costs by generating your own electricity from solar panels.
| Instantaneous (Gas) | Electric Storage | Heat Pump | |
| Best for | Small to medium homes wanting endless hot water | Households on off peak tariff, budget installs | Energy efficiency and lower running costs |
| Upfront cost | Medium to high purchase and install | Lowest | Medium to high purchase and install |
| Running costs | Medium | High on continuous tariff, lower on off peak | Lowest |
| Space | Compact, wall-mounted | Room for storage tank | Outdoor space, surrounding air circulation |
| Hot water availability | Endless, limited by flow rate | Limited by tank size | Limited by tank size, efficient recovery |
| Installation | Gas connection, pipe sizing | Standard electrical | Outdoor location, electrical connection |
| Main drawback | Simultaneous demand limits | Heat loss from storing water | Noise, needs airflow |
Solar hot water systems and solar water heaters are also worth comparing if your home gets strong sun exposure. They carry medium to high purchase costs but can deliver significant energy savings over time. Gas water heaters carry an industry energy rating label in Australia, but there is no universal energy rating label across all hot water system types, so comparing running costs directly with your installer is the most reliable approach.
Couple in a unit, one bathroom: A gas continuous flow system is a natural fit. Compact, no storage tank needed, and more than enough flow rate for one or two people.
Family of five, two bathrooms: Simultaneous demand is the challenge. A larger gas continuous flow unit may work, but a well-sized storage system or heat pump water heater could be more practical if everyone showers in the same window.
Homeowner with rooftop solar panels: If you already have a solar PV system, pairing it with a heat pump or electric storage water heater on a timer can make the most of your own generation and save energy. An electric hot water system powered by solar is hard to beat for running costs.
The best hot water system for your home depends on your household size, connections, layout and budget. An instantaneous hot water system is a strong option for many Australian households, but it is not automatically the right fit for everyone. Getting the sizing, energy source and installation right matters.
Need help choosing? Contact Same Day Hot Water Service for expert advice, a tailored recommendation, and a fast quote on supply and installation.
It can be, because you only heat water when you use it, which eliminates standby heat loss. But an electric storage water heater on an off-peak tariff can still be competitive depending on your energy source and tariff.
Yes, provided the unit has a high enough flow rate. Gas water heaters rated at 20 L/min or higher can typically handle two outlets running at once, but performance drops as you add more.
For whole-home use, gas is more common and does not need three-phase power. Electric continuous flow hot water heaters are better suited to point-of-use applications unless your home has a three-phase supply.
For a whole-home electric hot water system, yes. Single-phase electric instantaneous water heaters are generally limited to low-flow single-outlet use, such as a basin or kitchen sink.
They do, but incoming water temperature affects performance. In cold locations, the unit needs a higher temperature rise, which reduces the effective flow rate. Gas hot water systems handle this better than smaller electric models.