Owners of sustainable homes can make immediate savings on energy and borrowing costs, according to new research released this week by the Green Building Council of Australia.
Independent analysis by KPMG has found owners of Green Star Homes are financially better off from day one, with savings on energy costs outpacing the initial upfront costs.
The data, the first of its kind since the Green Building Council of Australia launched a new standard for sustainable homes two years ago, also illustrates how significantly those savings grow over time. It shows green homeowners are able to pay off their loans faster and save up to $115,000 in interest costs on an average sized home.
The analysis compared a standard project home in Canberra, Melbourne and Sydney, with homes that incorporate all of the initiatives required to meet the Green Star Homes Standard such as solar panels, double glazed windows, improved insulation, heat recovery ventilation system and air conditioning.
“We’ve always known that a Green Star Home is better for the planet, and that living in one is better for our health,” said CEO of the Green Building Council of Australia, Davina Rooney.
“Now we have independent modelling to show that it is also better for your hip pocket.”
The modelling shows that a Green Star Home will typically increase your loan repayments by $38-$84 per month, but this is offset by the savings in energy costs of $90-$140 per month.
KPMG’s Partner of ESG Advisory and Assurance, Mark Spicer said “the results are particularly exciting as they show that the economics now align with the significant amenity uplift of a greener, more efficient and healthier home.”
Under the conditions modelled in the research, 60%, 56% and 56% reductions in first-year energy consumption are calculated for Sydney, Canberra and Melbourne respectively.
“While the energy efficiency features in a Green Star Home mean the purchase price is a bit higher, the immediate savings in energy bills cover the monthly loan costs,” Ms Rooney said.
“With many Australians experiencing rising cost of living pressures, there may be fears that choosing a sustainable home may not be financially viable. But this data shows, for the first time, how the long-term financial benefits far outweigh the initial upfront costs.
“The KPMG data found if the savings from energy costs were reinvested into the home loan as additional principal repayments, using a loan product offering a .05% reduction for green building practices, the long-term savings would be significant.”
Many lenders such as the Commonwealth Bank, NAB and Bank Australia now offer interest rate reductions for Green Star Homes. Homeowners need to be assessed for the increased borrowing capacity to service the loan.
“Ultimately, we found that buyers of Green Star Homes will be better off from day one, with those savings growing dramatically over the lifetime of a home loan”, Rooney said.
“The report also found that, with pressure on the energy markets, those financial benefits to the consumers are estimated to only increase over time.”
The Green Star Homes Standard was developed to ensure homes are highly efficient, powered by renewables, resilient and are healthy for residents.
The Green Building Council commissioned KPMG to provide an independent cost benefit analysis to understand the benefits the Green Star Homes Standard brings to the residential market and its consumers looking to buy a new home.
