Climate change and energy efficiency are some of the most pressing issues facing China today. With its economic growth since the economic reforms in 1978 the government has struggled to contain environmental damage and social strife related to the economy’s rapid transformation. With the rapid growth in population and urbanization the demand for housings escalated and thus existing houses are under threat of being demolished to make way for new construction. However there was a strong debate that existing houses should be maintained and upgraded instead of demolishing for new development as improvements to energy and water efficiency of existing homes can significantly reduce greenhouse gas emissions and decrease utility bills. This paper aims at reviewing the importance of existing houses and their environmental significance in conservation as opposed to demolition. This paper presents and discusses the preliminary results for the first two stages of a research project undertaken at the University of Technology Sydney to investigate environmental performance of historic housings in Xiao He Zhi Jie in Hangzhou, China.