Rising costs have driven the housing market toward sustainable features in residential spaces.

This green transformation means energy efficiency has more influence over buyers’ decisions. How has it affected property values across Australia?

Energy-Efficiency’s Affect on Home Value

Sustainability significantly improves home value because it reduces power consumption and utility bills. Domain’s Sustainability in Property Report found a 14.5% price difference for efficient homes compared to those without such features. The selling price is about $112,000 more, emphasising the green impact in Australia. For units, the disparity is 11.7% or about $70,000.

The trend has been consistent since 2019, as the value difference in energy-efficient homes has ranged from 12.6% in 2020 to 17.9% in 2022. While the numbers reflect greater housing market trends, the disparity is significant. For rental units, the advantage has remained steady since 2020, ranging from 11.4% to 14.8%.

Efficient homes quickly leave the market because of their sustainable features and scarcity. These dwellings are scarce, so buyers might not have long before someone snatches them up. Experts in the Domain report say the smaller volume can lead to bidding wars and higher prices, and the increased cost of living makes them more concerned about their domestic details.

What Buyers Prioritise in Their Homes

Homeowners wanting an attractive sale price must adhere to consumers’ preferences, especially regarding sustainability. Power efficiency is becoming a more significant priority among Australian consumers, whether buying or renting homes. A 2024 survey from realestate.com.au said 59% of them rated it as important or extremely important in their housing.

While homeowners and apartment dwellers prioritise sustainability, renters are even more concerned about the efficiency of their apartments. Utility costs are rising in Australia and worldwide, so consumers seek reprieve. The survey said people above 50 valued energy performance more than other age groups and wanted to reduce their monthly bills.

Reduced bills were the primary motivation for prospective homeowners and renters to find energy-efficient residences. However, over half of Australian buyers cited lowered carbon emissions and improved design as important factors. Property owners understood the impact on home value, as 48% used utility efficiency to increase the selling price.

Where Is Energy Efficiency the Most Impactful?

Australians from coast to coast understand the need for better utility systems, though the value impact differs by location. Domain’s Sustainability in Property 2024 report said green homes in Regional Australia see a 20.9% price increase compared to houses with less efficiency. Rentals increase by 30.8%, reflecting high demand outside the major metropolitan areas.

Melbourne saw the most significant price increase in Australian capital cities, with a 28.8% premium for energy-efficient houses and 22% for rentals. While Sydney is the largest town, its green effect was only 23.1% for homes and 11.7% for units. Domain attributed the difference to Melbourne’s market, which is more affordable than Sydney’s, so buyers may have more money to spend on housing.

While Melbourne and Sydney lead the way, other cities benefit from efficiency upgrades. Brisbane’s green homes experienced a 16.2% increase, leading to an extra $125,000 for homeowners. Perth’s housing market was the third-most successful metro area by percentage — sustainable properties saw a 17% boost and $107,000 more.

What Energy-Efficient Adjustments Affect Property Value? 

Buyers are selective about green residences and their features, so homeowners must be selective regarding their upgrades. Here are four impactful changes that can add to property value.

1. Solar

Prospective buyers in Australia want to reduce their utility bills, so addressing the root of these costs is essential. Homeowners should focus on renewable electricity through solar and other alternative sources. Photovoltaic (PV) panels produce clean power for communities, thus lessening the need for fossil-fuel-based resources.

The Domain report said solar was the greatest value-adding feature in 13 of Australia’s 15 largest suburbs. Over 42% of houses sold contained a solar installation — a 13% increase in the last decade. Whether PV panels or electricity generation outfits, harnessing the sun’s energy has helped homes become more efficient. The demand could coincide with the rise of EVs among Australian drivers.

2. Efficient Water Heaters

While buyers may focus on PV panels or thermostats, these water heaters significantly impact utility bills and overall performance. Experts say they constitute nearly 25% of a home’s energy output, emphasising the need for newer, more efficient models.

Australian homeowners benefit from solar water heaters because they draw less electricity from the grid. Efficient tanks also require minimal maintenance outside of replacing the antifreeze fluid. While the initial costs may be high, the return on investment of these solar installations is noteworthy in the housing market. Prospective buyers may also consider a heat pump or tankless models.

3. Increased Insulation

Heating and cooling significantly affect Australian homes, especially during the warmer months. Houses with solid thermal efficiency can better protect occupants from dangerous heat and rely less on their HVAC systems. The government’s Scorecard says insulation is significant in the ceiling, affecting heat loss and gain by 35% annually.

Homeowners who optimise their insulation can make their properties greener and more attractive to buyers and renters. The ceilings, walls, floors, doors and windows should be the primary focus of future renovations. These projects could include adding fibreglass batts, sealing leaks in the attic and installing radiant barriers.

4. Double-Glazed Windows

Fixing leaks around the windows is essential, though homeowners should consider the materials used. Upgrading to double-glazed windows can significantly improve home prices, depending on the property’s location. The Domain report said these features contributed the most value added to houses in St. Ives, New South Wales and Mount Barker, South Australia.

Double-glazed windows include two glass panes with a tiny air gap between them. The space performs as insulation and reduces heat transfer between the exterior and interior, thus increasing a home’s efficiency. Besides glazing, windows also benefit homeowners through their orientation. Experts say north-facing windows utilise solar energy and airflow to improve performance.

Navigating the Modern Housing Market in Australia

Homeowners worldwide are searching for ways to make their residences more sustainable. While these projects increase performance, they also significantly affect property value. From Perth to Brisbane, the substantial increase has led to profits for sellers.

By Jane Marsh, Editor in Chief at Environment.co

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