•We evaluate residential house design by varying wall claddings and star rating.•LCA and LCC approach evaluate life cycle environmental impact and cost on building.•LCA and LCC results are significantly affected by wall claddings and star rating.•GHG and CED impacts are decreased significantly per star house improvement.•LCA and LCC along with optimization algorithm can identify best possible design. This paper describes the life cycle assessment and life cycle cost analysis of a typical Australian house designs. It evaluates the effect of selected alternative wall assemblages on environmental impacts and life cycle cost over the various life stages of buildings (i.e. construction, operations, maintenance and final disposal). A case study house was used as the base case for all the alternative wall assemblage designs. This paper also reports on alternative wall assemblage designs that were produced with variations in external wall cladding, insulation type and thickness, air gap thickness and position. Each design was varied such that it achieved a chosen star rating. Five exterior wall claddings were selected, typical of the Australian building industry. These claddings were brick, autoclave aerated concrete block, fibro-cement sheet, pine saw logs and weatherboard. The results were analyzed for the whole building on a whole life cycle basis in terms of economic and environmental impact. The implications of life cycle environmental impacts and life cycle costs were evaluated and the optimum assemblage design is reported using optimization algorithm. A set of best solution is found depending on factors: the model assumptions, range of environmental and economic indicators considered, and the chosen quantitative criteria.