We are constantly being bombarded by companies and the government to reduce our energy and water use by doing things such as installing solar panels, rainwater tanks, sub surface irrigation, recycling grey water, installing more energy efficient lighting and heating/cooling, ceiling and wall insulation, sealing doors and windows to prevent draughts, installing double glazing or heavy curtains with pelmets and the list goes on and on.
What started out as a ‘carrot approach’ by government to encourage us to do these things by providing financial incentives has now turned to a ‘big stick’ financial penalty with the introduction of a carbon tax as well as spiralling water and energy prices.
Whilst there are some things that can be done around the home to reduce energy and water consumption at little or no cost, many of the initiatives require home owners to spend sometimes significant amounts of money to install the systems or modify existing ones.
Most homeowners will happily spend money on their homes either to improve the aesthetics of the home or improve their lifestyle. The other main reason is if they know they are adding value to their home. And why wouldn’t you, if you knew that if you spent $1 to immediately get a return of $2, just makes good financial sense regardless of any other factor.
Unfortunately though there is no hard evidence that shows how much extra value these things add to your home. However, after posing the question fairly widely to various professionals, the general consensus is that energy and water saving devices fitted to a home do indeed add value to the home but more importantly they make the home more desirable to potential purchasers. This could therefore translate into higher selling prices and quicker sales through higher levels of interest in the property and increased competition to purchase.
Recently a study was done by IPD Australia titled Green Cities 2011: Introducing the PCA/IPD Green Investment Index which concluded that office building that have higher Green Star Ratings achieve higher rents and lower capitalisation rates, which equates to higher property values. Now whilst this study was confined to commercial office buildings the fundamentals of a higher green rating equating to higher rents and higher values could certainly be regarded as a compelling argument for residential properties to enjoy the same benefits if they too have a high green star rating.
But regardless of all of that, at the end of the day we all like to feel that we are doing something good for the environment. And with electricity and water prices spiralling upwards at a great rate anything we can do to lower these costs is certainly a good investment.
Mark Lewis is the Executive Chairman of Bernie Lewis
This article is for general information only. Since everyone's personal financial situation is different this article can't be taken as financial advice. If you would like to discuss this article further or how it could relate to your personal financial circumstances please give us a call on (08) 8300-8300 so we can discuss it with you in more detail.
