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$125,000: Buyers willing to pay more for energy-efficient homes

·3-min read
Houses with solar
The average Australian household could save $1,000 on energy annually by installing solar. (Source: Getty)

Buyers are willing to fork out as much as $125,000 extra for energy-efficient homes, revealing a growing appetite for comfortable homes with low heating and cooling costs.

Energy-efficient homes are typically more expensive to build because they have more insulation and features such as double-glazed windows that add to the cost.

But these enhancements provide savings in the form of lower bills for heating and cooling. A house built one star higher than the minimum six stars that’s mandated saves around $450 a year on heating and cooling.

In the Australian Capital Territory, which is the only jurisdiction where it’s mandatory to disclose the energy-efficiency rating of a dwelling at the point of sale or lease, a new Domain report showed energy-efficient homes consistently reeled in higher prices.

According to the research, a home with a top energy-efficiency rating commanded 99.3 per cent more per square metre compared to the lowest-rated dwellings.

The report also found the average energy-efficient house was $125,000 more expensive than the equivalent conventional home, amounting to a 17.1 per cent difference.

The average energy-efficient unit attracted $72,750 more than a non-efficient unit in 2022.

Domain chart green hosues
The price premium of energy-efficient homes compared to non-energy efficient homes in Australia. (Source: Domain)

Energy-efficient homes also spent less time on the market and had a higher number of views on Domain, enjoying an average of 8.7 per cent more listing views on houses and 5.5 per cent more views for units in 2022.

“Sustainable features may not be a starting point for the majority of home hunters but it is clear they are willing to pay a premium for them,” the report said.

“This may be due to understanding the sustainability benefits, greater liveability and reduced utility bills of these homes.”

However, the hefty price tag on these homes leaves them out of reach for many first-time buyers who are sensitive to additional upfront costs.

Ditch a gas connection and save

Opting out of gas can also save you money.

By choosing electric appliances rather than gas, you could shave 35 per cent off your annual bills, or around $845 a year, according to recent modelling by Renew.

This modelling was based on actual Melbourne gas and electricity prices from early June, and compared a standard all-electric home with a dual-fuel home that ran on both gas and electricity.

Solar panels are another pathway to lower bills.

While not cheap to install - costing around $5,000 for a 5kW system - analysis by green lender Brighte found the average Australian could save $1,000 on their energy bills each year by installing solar.

“We’re seeing more and more Aussies make the switch to solar,” Nigel Freitas, spokesperson at green lender Brighte said.

“Cost of living is only increasing and solar can ease some of the pressure on families that are already feeling the squeeze from their energy bills,” Freitas said.

One in five Australians plan on installing solar panels in the next 12 months, according to a recent survey by the company.

Freitas said the biggest barrier for solar uptake was the upfront cost. However, he said there were government rebates and subsidies in most jurisdictions as well as low-cost financing options to help people get over the initial hurdle.

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