Are Australians demanding greener homes?

The residential property sector accounts for a massive 57 per cent of Australia’s property emissions.¹ Not only that, but buildings are the world’s single largest contributor to greenhouse gas emissions, use a third of our water and generate 40 per cent of our waste.¹  Fortunately, sustainable building design and initiatives are slowly but surely gathering momentum in Australia.

Sustainable building has two key objectives: to reduce harm to the environment, and to create a healthier space for residents. The most sustainable buildings can produce their own energy and recycle all water and waste. While this is still only seen in the commercial building space – at least in Australia – residential buildings are on their way. Delivery on more sustainable residential buildings is being led by big developers like Mirvac, Stockland, Frasers and Lend Lease. Nationally, there are 72 residential buildings with a Green Star rating (an internationally-recognised rating system for sustainable design), housing a total of 59,500 residents.¹

The features of Green Star buildings are many and varied, but some common elements include energy-saving lighting and appliances; insulation; water conservation measures; spaces designed to maximise sunlight and natural cross-ventilation; indoor plants; solar power; and the use of non-toxic paints, chemicals; and recyclable and/or renewable materials in the building phase.

These buildings deliver the following benefits to owners and tenants:

1. The biggest bonus is that they save money. Green Star buildings are more energy and water efficient using 66 per cent less electricity and 51 per cent less water than the average building.¹ They also result in reduced insurance premiums.
2. Secondly, they improve the health and wellbeing of residents. Good ventilation, high-quality indoor air quality, non-toxic materials and good levels of daylight have all been linked to lower risk of asthma, respiratory conditions and mental health problems.

How much do we want sustainable homes?

It’s likely to be the younger generation who will determine how quickly environmentally-friendly homes become ‘in demand’.

A survey by Eurocell² in the UK showed that 25 to 40-year-olds are increasingly looking for more sustainable features in their homes. A few interesting statistics to come out of the survey include:

• 52 per cent of respondents said it was ‘somewhat’ or ‘very important’ that their home was made with environmentally responsible materials.
• 49 per cent said they would be ‘more likely’ to buy or rent an eco-conscious home.
• The most popular sustainability features were: double/triple glazing (58 per cent), maximised natural light (41 per cent), solar panels, energy efficient appliances and overall design and layout (each 35 per cent) and use of recycled and sustainable building products (22 per cent).

The big question of interest to investors and vendors of course is, would renters and buyers pay more for a more sustainable home?

Around a third of respondents (renters and homeowners) said they would pay up to 10 per cent more, 28 per cent of them would pay up to 20 per cent more and 22 per cent would pay up to 30 per cent more.

While not yet a majority, the number of people who would pay more is nevertheless already significant. While it’s hard to predict how much these figures will increase over the next decade, and how they differ to those of young Australians, it’s safe to say these figures will increase.

What are we doing about it?

Governments are getting on board to incentivise owners to make their buildings more sustainable. A recent initiative of City of Sydney (Sydney City Council), Smart Green Apartments, is a free service providing energy, water and waste assessments for apartment buildings and the technical support required for environmental upgrades.

In fact, it’s been over two decades since the Australian Government started taking concrete steps towards a greener built environment. Back in 1998, the government developed NABERS, a national rating system to measure the environmental performance and operational efficiency of buildings. It finally launched NABERS for apartment buildings in June last year. According to a survey by City of Sydney and UTS, 56 per cent of apartment owners said a NABERS star rating would be valuable when purchasing.

The Green Building Council of Australia is currently working on a green-rating system for detached housing, and once this is released we will have a reliable, internationally-recognised sustainability rating tool for all residential properties.

The benefits for both owners and renters of sustainable homes are clear, although the financial argument is still not strong enough for most investors. There are already indications that capital value and rental value is elevated for Green Star-rated units and the evidence is mounting. As the push for more environmentally friendly alternatives escalates across all industries, it is expected that in the very near future, property investors will be able to charge more rent for sustainably designed properties and be looking at significantly better capital gains.

Building more sustainable homes around the country

• Convesso at 8 Waterside Place, Melbourne, uses 65 per cent less energy for heating and cooling than similar sized, ‘non-green’ apartments.⁴
• The Prince’s Terrace, Adelaide, is the first residential project in Australia to achieve a 6-Star Green-Star rating. Each home (terraces and flats) uses half the energy and half the water than the average dwelling thanks to design innovations, including a 1.5kW photovoltaic array on the roof. It was also built using local granite and re-used bricks.⁵
• Cirque Apartments in Perth hasa 5-Star Green-Star rating. They use 35 per cent less energy, 25 per cent less water and emit 44 per cent less carbon dioxide than non-sustainable residential developments.⁶
• The Smart Green Apartments initiative in Sydney has yielded a huge saving for residents of Aria, in Waterloo, who now pay $61,000 per year less in energy bills thanks to lighting upgrades, rooftop solar panels and new speed drives on pumps and fans.⁷

SOURCES: ¹ https://new.gbca.org.au/, ² https://www.thefifthestate.com.au/innovation/residential-2/new-buyers-and-renters-want-eco-friendly-homes/, ³ https://www.stratachoice.com.au/kb/nabers-for-apartments/, ⁴ https://www.gbca.org.au/uploads/138/1930/Factsheet_MURTv1.pdf, ⁵ https://gbca-web.s3.amazonaws.com/media/documents/future-homes-document-a4-portrait-v7.pdf, ⁶ http://www.stirlingcapital.com.au/was-greenest-healthiest-building-set-for-canning-bridge/, ⁷ https://www.cityofsydney.nsw.gov.au/live/residents/sustainable-city-living/smart-green-apartments

DISCLAIMER: The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Mortgage Choice recommends that you consider whether it is appropriate for your circumstances. Mortgage Choice recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.