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:

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:

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

SOURCES: 1, 2, 3, 4, 5, 6, 7

This content was originally published here.