Canberrans willing to pay more for energy efficient homes, study shows
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Canberrans willing to pay more for energy efficient homes, study shows

Canberrans are willing to pay higher premiums for a property if it is more energy efficient, according to new research.

A recent University of Melbourne study, which examined 100,000 ACT property sales between 2011 and 2016, found buyers were willing to pay up to 10 per cent more if a property had a higher energy efficiency rating.

The ACT is the only jurisdiction in Australia with mandatory disclosure laws for energy efficiency ratings.

The ACT is the only jurisdiction in Australia with mandatory disclosure laws for energy efficiency ratings.

Photo: Virginia Star

The analysis found homes in the ACT with a five-star rating out of a possible 10 came with a 2 per cent premium, while those with six stars attracted a premium of 2.4 per cent.

However, those that were more energy efficient with a seven-star rating had a 9.4 per cent premium, according to the data.

While there was a large increase in premiums for Canberra properties sold with higher energy, the increase was less pronounced when it came to rentals.

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Five- and six-star properties attracted premiums of 3.5 and 3.6 per cent respectively, while those with seven or eight stars flatlined at 2.6 and 3.5 per cent.

While houses sold on the Canberra property market are required to display their energy efficiency, it's voluntary for landlords renting out homes and units.

The study revealed more than half of all rental properties in the ACT do not disclose energy ratings, compromising the consistency of the scheme.

Most homes in Canberra go up to seven stars for energy ratings, with solar panels playing a large role in determining the energy efficiency level.

Most homes in Canberra go up to seven stars for energy ratings, with solar panels playing a large role in determining the energy efficiency level.

Photo: Michele Mossop

Co-author of the study and University of Melbourne property lecturer, Georgia Warren-Myers, said landlords choosing not to disclose ratings presented a "moral hazard".

"By not disclosing that information, renters aren't knowing if they're moving into a home where it could be rated as little as one star, and that's important when it comes to power bills," she said.

"From a suburb perspective, suburbs with a lower socioeconomic level had a higher level of non-disclosure compared to other areas.

"There's a couple of loopholes there with the rental market."

Dr Warren-Myers said energy efficiency ratings were becoming one of the most important aspects of a property for potential buyers.

"The disclosure of energy efficiency information is right up there with how many bedrooms or bathrooms a property has," she said.

"The connection between sustainability and house prices is pivotal in terms of driving the market."

The ACT is the only Australian jurisdiction where disclosure of energy efficiency ratings for homes is mandatory.

While disclosure in the ACT has been around since 2003, discussions have been under way in other states for some time.

Dr Warren-Myers said the study was a renewed call for mandatory disclosure to be rolled out across the country.

"It's been on the cards for a number of years," she said.

"The data shows people are valuing energy efficiency and making decisions based on the energy efficiency portrayed in these ratings."

Andrew Brown is a journalist at the Sunday Canberra Times. Andrew has worked at the Canberra Times since 2016.

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