Energy efficiency has become a key factor shaping Australia’s real estate market, driven by updated regulations, evolving buyer preferences, and financial incentives. The CoreLogic December 2024 Report provides an in-depth look at how energy resilience impacts construction costs, resale values, and market trends. Here’s what homeowners, buyers, and investors need to know.
The Current State of Energy Efficiency in Australian Homes
The report highlights a significant gap in energy efficiency between older and newer homes:
• Homes Built Before 2010: Median energy star rating of 2.8 out of 10.
• Homes Built After 2010: Median energy star rating of 5.9 out of 10, thanks to improved building codes.
Newer housing stock, particularly in regions like the ACT’s Molonglo Valley, performs better, with many homes meeting or exceeding the 6-star rating introduced in the 2010 National Construction Code (NCC). Updates in recent years have further increased standards, with 7-star ratings now required for new builds.
Construction Costs: Higher Upfront, Long-Term Savings
Increased Costs to Meet Standards
• Building homes to the new 7-star standard adds $10,000–$30,000 to construction costs, depending on the materials and location.
• Features like double glazing, advanced insulation, and passive solar design contribute to higher costs but are essential for achieving energy efficiency.
Energy Savings Offset Costs
The report estimates that energy-efficient homes reduce annual heating and cooling costs by 25%–40%, making them more economical in the long term. For example:
• A typical 7-star home in Melbourne could save $1,500–$2,500 annually on utility bills compared to a 2-star-rated home.
Resale Values: Energy Efficiency Pays Off
Premium Pricing for Energy-Efficient Homes
Energy-efficient homes consistently achieve higher resale values:
• Properties with 6-star ratings or above command a 2%–9% premium compared to less efficient homes.
• Retrofitted older homes see a 5%–10% increase in resale value, particularly in competitive markets like Sydney and Canberra.
Market Examples
• In Canberra, homes with higher energy ratings sell faster due to buyer demand for low-energy bills and climate-conscious designs.
• Suburbs with predominantly newer builds, such as those in the Molonglo Valley, lead in price growth, benefiting from their higher energy performance.
Regional and Market Dynamics
The report highlights disparities between regions, driven by housing stock age and local policies:
1. High-Performing Regions
• ACT: Leads the country with the highest median energy star ratings due to strong local policies and a high concentration of modern housing.
• New Developments: Areas like Molonglo Valley showcase how modern designs aligned with energy standards enhance market appeal.
2. Underperforming Regions
• Hobart: Low median star ratings due to a large stock of older homes, coupled with higher heating demand in colder climates.
• Sydney’s Heritage Suburbs: Older homes in premium locations face high retrofitting costs, limiting their energy efficiency
Rental Market Trends
Energy Efficiency Drives Rental Premiums
• Energy-efficient rental properties are more attractive to tenants due to lower utility bills, enabling landlords to charge a 5%–7% premium.
• Renters are increasingly prioritizing homes with features like solar panels, double glazing, and efficient heating/cooling systems.
Potential Regulations
Future policies may introduce minimum energy standards for rental properties, requiring landlords to invest in upgrades or risk reduced tenant demand.
Financial Incentives and Green Lending
The report emphasizes the growing availability of financial incentives for energy-efficient homes:
• Green Loans: Banks and financial institutions offer lower interest rates for homes with high energy ratings, making energy efficiency a selling point.
• Government Rebates: Solar panel installations, battery storage, and insulation retrofits are supported by federal and state-level rebates.
The Case for Retrofitting
Addressing Older Housing Stock
• Over 50% of Australian homes were built before 2000, meaning a significant portion requires retrofitting to meet modern standards.
• Common retrofitting upgrades include:
• Insulation: Reduces heat loss and improves comfort.
• Double Glazing: Enhances thermal efficiency and noise reduction.
• Solar Panels: Offsets energy costs and increases star ratings.
Economic Impact
Retrofitting older homes can increase their energy ratings by 2–3 stars, significantly improving resale values and making them more attractive to energy-conscious buyers.
Long-Term Market Impacts
1. Future-Proofing Real Estate
• Homes with higher energy ratings are aligned with Australia’s net-zero emissions goals and will retain their market value as energy efficiency becomes a standard expectation.
2. Climate-Responsive Designs
• New homes are increasingly incorporating passive cooling, durable materials, and water-efficient systems to address the risks of extreme weather caused by climate change.
3. “Brown Discounts” for Inefficient Homes
• Properties with low energy ratings may face declining market appeal, particularly as buyers become more sustainability-focused.
Key Takeaways
Aspect | Impact |
Construction Costs | +$10,000–$30,000 for compliance; reduces long-term utility costs. |
Resale Values | +2%–9% for energy-efficient homes; retrofitting boosts older homes’ market appeal. |
Rental Market | +5%–7% rental premiums for efficient properties; future regulation may enforce minimum ratings. |
Regional Variation | Newer suburbs benefit from compliance; older areas face higher retrofitting costs. |
Financial Benefits | Access to green loans, rebates, and potential insurance savings for energy-efficient homes. |
Disclaimer
This article is based on publicly available data and insights from the CoreLogic December 2024 Report. The content is for informational purposes only and should not be considered financial or investment advice. Readers are encouraged to seek professional consultation before making property-related decisions.
References
1. CoreLogic December 2024 Report
Insights into energy efficiency, construction trends, and market impacts.
2. National Construction Code (NCC)
Standards for energy ratings in new builds.
3. Herald Sun
“Melbourne Suburbs Leading Energy Efficiency”
4. REIV Market Analysis
Quarterly performance of top-performing suburbs.
5. Domain
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