To reduce greenhouse gas emissions, nations have introduced energy efficiency regulations for new and existing buildings. This has been considered advantageous as more efficient building envelopes would reduce energy consumed to heat and cool home interiors to within accepted thermal comfort bandwidths. However, as these methods have been adopted, many nations have identified an unintended visible presence of surface and interstitial condensation and mould in new code-compliant buildings. In Australia, it has been estimated that up to 50% of Australian houses constructed in the last decade (2006–2016) have a presence of condensation and mould. Australia introduced its first condensation and mould-related building regulations for new homes in 2019. This paper reports on the hygrothermal and mould growth analysis of the most common low-rise residential external wall system, a timber-framed clay masonry veneer wall. A key component of this paper discusses the application of innovative methods in the Australian context. The external wall’s moisture accumulation and mould growth were simulated for a period of ten years using the transient hygrothermal simulation tool, WUFI® Pro, and the mould growth model, WUFI® VTT. This study identified significant risks for this typical external wall system when constructed in a temperate climate.