Real estate listing company Domain released its Sustainability in Property 2024 report, which found that energy-efficient homes attract, on average, 16 per cent more listing views than homes that are not energy-efficient, despite eco-friendly homes costing more.
Domain also said that the properties that were energy-efficient (including homes that were north-facing, had double-glazed glass, solar panels, and heat recovery ventilation) sold 4 per cent faster compared to non-energy-efficient homes.
The report revealed that the national average cost of an energy-efficient house was 14.5 per cent (or $112,000) more expensive than non-energy-efficient homes and 11.7 per cent (or $70,000) more expensive for units.
The price difference between energy-efficient homes and non-eco-friendly homes is more prevalent in Melbourne and Sydney, compared to the national average. Melbourne boasted a 28.8 per cent (or $241,750) price increase for energy-efficient homes, with Sydney noting a 23.1 per cent (or $330,250) increase in property prices.
Domain’s report said that the increased prices would incentivise builders and investors to build energy-efficient homes, as they would “want to benefit from the additional premium”. However, the report also said that the price premiums would push first home buyers to “less sustainable” and “lower-quality” homes.
Despite the increased cost of energy-efficient homes, the report said that there was an “over-representation” of middle-income earners in suburbs where the cost increase was most prevalent. For example, Reservoir (a suburb in Victoria) had an energy-efficient price difference of 48 per cent but had an average annual household income of $80,132.
Dr Nicola Powell, Domain’s chief of research and economics explained why middle-income earners may be attracted to energy-efficient homes: “There could be several factors at play here.
“Middle-income households may be investing in energy-efficient features to lower their household running costs and align with their personal values of environmental consciousness. Another explanation could be the prevalence of new-built homes in these areas with energy-efficient features included.
“It is worth noting that with some of these suburbs being in regional areas, it shows Australians across all socioeconomic demographics are motivated to make their homes more sustainable.”
The report comes as non-major bank ING Australia announced it was offering up to $2,500 in cashback to customers who purchase or refinance a home that meets the minimum energy rating criteria under the Nationwide House Energy Rating Scheme (NatHERS).
Home loan provider Rate Money also announced it would discount a borrower’s interest rate by 0.2 per cent on its new Elevate Construction Loan product if the borrower’s home meets the minimum energy rating criteria under NatHERS.
Davina Rooney, CEO of Green Building Council Australia, said on the increased demand for energy-efficient homes: “As Australians become increasingly aware of the health, environmental, and cost benefits of living in more sustainable and energy-efficient homes, we’re naturally seeing a significant surge in demand for these properties.
“This shift is particularly welcome, given that residential properties contribute to 10 per cent of Australia’s carbon emissions. It’s encouraging to see this growing preference, which promises to reshape our housing market.”
