Does sustainable architecture pay off?

Australians no longer need to be convinced of the merits of sustainability for environmental reasons.

But how much value does Sustainable Architecture actually add to our house price?

Fortunately, a little known experiment that commenced over ten years ago in the ACT, can help us answer the question:

“Does Sustainable Architecture pay off?”

Does Sustainable Architecture pay off?

In 1999, the ACT was the first jurisdiction in Australia to introduce mandatory energy efficiency rating disclosure for all houses on the market. This required:

• Sellers of both new AND existing homes to provide Energy Efficiency Ratings to buyers
• Landlords to provide Energy Efficiency Ratings to tenants

The ACT’s Energy Efficiency Ratings, EERs, are a 0 to 10 star housing energy efficiency scale measured using the FirstRate thermal software package – the same system used by Victorian Energy Assessors today.

Sustainable Architecture pays

In 2007, the Australian Bureau of Statistics (ABS) commissioned a report to investigate the effect that these EERs had on house prices in the ACT.

The study found that:

“If the energy performance of a house improves by 1 star level, on average, its market value will increase by about 3 per cent.“

The report went on to quantify:

“A detached house sold in 2005 for (the median price of) $365,000 could fetch an additional $8,979 with only a 1 star improvement in energy rating“.

The effect of mandatory energy efficiency rating disclosure has had such a profound effect on the housing market, that the report even suggests that the traditional real estate mantra of ‘Location, Location, Location’ has been replaced in the ACT by “Location, Location, EER“.

Is this just an ACT thing?

In 2004, the Australian Government, supported by all Australian State and Territory jurisdictions, committed to the concept of mandatory energy efficiency rating disclosure through the National Framework for Energy Efficiency (NFEE).

With an expected phase-in from May 2011, ALL Australian homes will require energy efficiency ratings disclosure to both prospective home buyers AND tenants – in much the same way that fridges and washing machines must display their energy efficiency ratings when sold at retail today.

When this happens, sustainably designed houses across Australia will then find themselves at a premium in both house price and rent achieved.

How can I take advantage of this?

If you are considering a new home or development, be sure to employ the 7 Sustainable Architecture pillars in your design + build process.

Currently, all new homes and major renovations in Victoria are required to comply with 5 star energy rating requirements.

If the findings of the ACT study hold true, even a 2 star level improvement over the minimum 5 star requirement (readily achievable using the 7 pillars) will increase your home’s value by 6 per cent.

This is not including the year round cost savings (and in some cases, elimination) of heating and cooling bills achieved due to sustainable design – further improving your return on investment.

Sustainable Architecture: Conclusion

In 2007, the Australian Bureau of Statistics (ABS) commissioned a report to investigate whether, in the ACT, there was any relationship between house EERs and house prices.

The report found that:

“If the energy performance of a house improves by 1 star level, on average, its market value will increase by about 3 per cent.”

By incorporating the 7 Sustainable Architecture pillars into your design + build project, a 2 star level improvement over the minimum 5 stars can be readily achieved.

The question of “does sustainable architecture pay off?” then becomes:

“How much would you like sustainable architecture to pay off?”

CONSIDERING SUSTAINABLE ARCHITECTURE?
Don’t settle for just 5 stars!
Engage our sustainable Design + Build services today.

Related Links:

• ABS report on the Relationship between Energy Efficiency Rating and House Price in the ACT
• Australian Government to introduce Mandatory Energy Efficiency Rating disclosure
• REIV Quarterly Melbourne Median House Price data

Related posts:

1. Sustainable Architecture Pillar 3: Insulation
2. Energy efficient house design: how much is each energy star really worth? (Free downloadable PDF)
3. Sustainable Architecture Pillar 1: Thermal Comfort
4. Designing the Future: Melbourne Weekly Cover Story (Downloadable PDF)
5. Sustainable Architecture 101: Introduction

Tagged as: Architecture + Design, Melbourne, Sustainability, sustainable architecture, Victoria