Does green pay?

It’s time to look beyond location, location, location

If you’re like most buyers, location and price are the biggest factors when you’re hunting for a new home.

But smart buyers also want reassurance that their home will be a sustainable long-term investment.

There are several rating systems in the market that can assess the energy efficiency of your home.

green sustainable living cost investment

A Green Star rating, however, is more than an indicator of energy efficiency. When your home or community has a Green Star rating, you know a whole host of environmental factors – from water use and materials selected to indoor environment quality and transport infrastructure – have been addressed.

Many buyers are beginning to see Green Star as a mark of quality when they look for a new property.

And evidence is emerging that a green rating translates into a higher sale price when the time comes to sell.

Most of the research we have comes from the commercial sector, which has found that green buildings deliver consistently higher returns. One Australian report, Building Better Returns (2011), found that Green Star-rated buildings deliver a 12% ‘green premium’ in value and a 5% premium in rent, when compared to non-rated buildings.

A 2008 study from the ACT, which examined the relationship between energy efficiency and house prices, found that each half-star increase in the energy efficiency rating translated into a 2% increase in capital value.

Another broader American study, The Value of Green Labels (2012), involved a pricing analysis of 1.6 million single-family home sales in California from 2007-2012. The researchers found that, while the average sales price of a non-certified California home was $400,000, a green certification lifted the price by more than $34,800. This translated into a 9% green premium.

It's easy to focus your attention on getting into the market today. But buying a house is likely to be the biggest financial decision you’ll ever make – which is why thinking about sustainability can save you thousands in the long-term.

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