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21 Jul 2022

Raise the value of your home and help the planet at the same time

By Damon Frith, Wealth Editor, Citi Branded Wealth Improve your health, reduce costs and improve the value of your home - sustainability is not just a buzzword

As concerns over climate change rise to the fore, sustainability features and environmental friendliness have emerged as key considerations for the property market.

In addition to being a selling point on ethical grounds for environmentally conscious buyers, sustainability can also provide direct economic benefits by reducing utilities costs for energy and improving the health of occupants.

For this reason it’s important for homebuyers to give thorough consideration to the impact that sustainability features can have on the value of their real estate holdings.

Does greening my property raise Its value?

While it’s easy for people to voice ethical concerns in the open, public attitudes do not always translate into real change when it comes to economic decision-making.

Even if climate change has become a more prominent issue in both the news and on social media, the question remains of whether sustainability features have an actual impact on the market value of a property.

A range of research indicates Australia has reached the point where adding sustainability features to residential property can provide a major boost to its value.

A recent study by Queensland University of Technology (QUT) and PRD Nationwide found the median sales price of homes with recorded sustainability features in Australia is 10% higher than those of homes that lack them.

The same study found these properties proved far more popular with buyers, selling 13 days faster than their peers that lack sustainability credential.

How can I Improve the sustainability of my residential property?

Homeowners have two main methods at their disposal for improving the sustainability and green credentials of their residential properties.

These are raising energy efficiency, via the installation of features such as renewable energy and insulation; and improving the health impacts of a property via measures such as ventilation and the use of toxin-free materials.

Each of these methods will have its own separate impact upon the value of the property, given that they target different areas of functionality.

Raising the energy efficiency of your home

Energy efficiency is the first thing that comes to mind for most people when the topic of green building and sustainability is mentioned.

Homeowners can improve the energy efficiency of their properties via a range of measures, including the use of insulation and other design features to reduce heating and cooling requirements, as well as the installation of renewable energy facilities that cut down on the usage of power that’s sourced from the grid.

Improvements to energy efficiency translate into direct savings during the actual occupancy and usage of a residential property, and thus have an economic impact even prior to sale.

A study last year from Environment Victoria indicates that energy-efficient homes can cut electricity and gas bills by up to 40% per year, which translates into annual savings of up to $1000 for the average household in the state of Victoria.

Given that energy efficiency can achieve major savings when it comes to utility costs throughout the full lifecycle of a property, it’s no surprise at all that that this also translates into a sizeable difference in sales prices.

A review of existing research by the Sustainable Buildings Research Centre of the University of Wollongong found that houses with higher energy ratings attract price premiums of between 5 to 10% compared to less efficient homes.

Improving sustainability by making homes healthier

Another means for owners to improve the sustainability of their homes is via the incorporation of features that are conducive to the physical and mental well-being of occupants.

Green building advocates increasingly consider the health improving features of a property to be a key form of sustainability.

The Green Building Council of Australia launched the new Green Star Homes Standard in August of this year, which requires that new housing satisfy criteria for health that include ventilation, insulation and the use of minimal toxins in carpets and paint.

Because the health features of a building have a direct impact upon the physical and mental wellbeing of occupants, they can vastly improve the appeal of a property to owner-occupiers who plan to spend much of their lives in their new homes.

A 2017 study by the Global Wellness Institute (GWI) found that homes in the US designed to improve people’s wellness command sizeable premiums of between 10 to 25%.

This serves as firm evidence of the willingness of today’s homebuyers to pay significantly more for buildings that provide health benefits.

Given the impressive premiums that the real estate market is willing to pay for sustainability features, it’s important for homeowners to take them into consideration when purchasing or upgrading their properties.

Any advice is general advice only. It was prepared without taking into account your objectives, financial situation, or needs. You should also obtain and consider the relevant Product Disclosure Statement and terms and conditions before you make a decision about any financial product. Investors are advised to obtain independent legal, financial, and taxation advice prior to investing. Past performance is not an indicator of future performance.

National Australia Bank Limited (ABN 12 004 044 937, AFSL and Australian Credit Licence 230686) (“NAB”) is the credit provider and issuer of Citi branded financial and credit products. NAB has acquired the business relating to these products from Citigroup Pty Ltd (ABN 88 004 325 080, AFSL and Australian Credit Licence 238098) (“Citi”) and has appointed Citi to provide transitional services.

“Citi”, “Citibank”, “Citigroup”, the Arc design and all similar trade marks and derivations thereof are used temporarily under licence by NAB from Citigroup Inc. and related group entities.

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