Green home market check-in: Aussies keen for sustainable houses, but price affordability may hold them back

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With Australian homes producing 13% of the country’s greenhouse gas emissions, it’s no surprise that Aussies are keen to find greener options for their property and finances.

However, a recent property report by Domain finds that affordability and availability of sustainable homes is a significant roadblock for many Australians. 

The report shows that “two-thirds of home buyers have a preference for energy-efficient homes when given a choice,” but the median price of a sustainable house has an additional cost of about $127,000, making it less attainable–especially for first home buyers.

Below you can see that the price difference between an energy-efficient home and a non-energy efficient home has increased throughout the years.

However, eco-friendly homes tend to be more money efficient and economical in the long run, especially when it comes to utility bills. According to Domain, several homebuyers realise this, which is why these homes sell faster than non-energy efficient homes.

The Domain report also says, “a house built with a 7-Star energy rating will save on average $450 per year on heating and cooling compared to a 6-Star energy rating.”

“[Eco-friendly homes] have greater buyer interest (8.7% more views per house listing and 5.5% for units) and sell quicker (-3.8% less days on market) than their non energy-efficient counterparts. Regardless of location, they are found at a premium Australia-wide,” says the report.

What makes a property sustainable?

Typically having a sustainable property means that it’s energy efficient and is built in such a way that it reduces its general emissions. This may include having solar panels, proper wall insulation, having recycled water pumps and using recycled materials.

Just like electric vehicles, the technology and materials for sustainable homes is expensive, and is usually reflected in the property’s original upfront cost. It also doesn’t help that recently material costs have gone up due to the disruption of the supply chain during the pandemic. 

For example, the average cost for installing solar panels now can be anywhere from $3,000 to $12,000. And what determines the final cost ultimately depends on the location, size, oration and who installs your panels. 

Installing just solar panels doesn’t mean that a house is sustainable. Several factors are in play, and the more technology, materials and appliances in the structure to make it green, the more likely it’ll be reflected in the price.

As mentioned, these eco-friendly homes come with a pretty hefty premium upfront, but it might save the buyer money in the long term.

Domain also says that only 1% of home buyers actively search for eco-friendly homes when looking for property, which is a bit of a paradox because Domain’s research says that sustainable homes sell quicker than non eco-friendly ones.

It’s also possible that some buyers just aren’t aware that eco-friendly options are out there, so it certainly pays to do some research.

If you’re on the market for a green home, it might be good to consider a green home loan. Several green loans reward you with discounts for choosing a greener option. Alternatively, you can start comparing home loans below.

Home loan comparisons on Mozo - last updated 21 April 2024

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    interest rate
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    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

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    Initial monthly repayment
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    fixed 3 years
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    Initial monthly repayment
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    interest rate
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    Initial monthly repayment
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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