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Energy efficient homes can attract a premium of up to 10% more

Energy efficient homes can attract a premium of up to 10% more

By Jessica Yung

A home's energy efficient rating has become one of the key factors home buyers and renters are taking into consideration when moving to a new home.

We all know when it comes to real estate, it’s all about location, location, location. However other big factors that can affect a home buyer’s decision are the number of bedrooms, bathrooms, carparks, outdoor areas, and now, to add to this list, energy star rating, according to a study by the University of Melbourne conducted on tens of thousands of property transactions in the Australian Capital Territory from 2011 to 2016.

We all want an energy efficient home. It’s often more comfortable to live in and can be less costly to run. These can be important factors for home buyers and renters. Surprisingly, however the ACT is the only part of Australia that has made it mandatory to disclose a home’s energy rating through a regulated scheme.

The energy efficiency of a home can attract a premium of up to 9.4% in some cases. The study found, properties with an Energy Efficient Rating (EER) of five and six, compared to three-star properties, attracted premiums of 2 and 2.4 per cent. Whereas properties with an EER of seven (the highest efficiency) attracted premiums of up to 9.4 per cent.

There were similar results reported in the rental market –five and six-star properties rented at 3.5 and 3.6 per cent premiums respectively compared to less efficient three-star properties”

The energy efficiency is based on the running costs of the home in terms of energy output. Homes with an EER of six stars can be up to four times cheaper to run per year than homes with an EER of zero.

“People value energy efficiency and make decisions based on these ratings,” said Dr Georgia Warren-Myers, a University of Melbourne property lecturer and report research.

“By providing a mandatory disclosure program Australia-wide, decision making by owners, occupiers and landlords will drive more energy efficient dwellings, potentially reducing carbon emissions associated with housing,” added Dr Warren-Myers.

“For tenants who have limited capacity to make changes to a property, not knowing the energy rating means they can effectively be penalised from the perspective of household bills.”

Disclosing energy ratings can help consumers make informed decisions that could result in lower energy bills, more comfortable homes and a lower carbon footprint. While at the same time, allowing sellers to capitalise on investments made in energy efficient improvements.

Source: Lucy Bladen, June 2018;

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