New research shows buyers place a premium on energy performance
Homes equipped with solar power systems command an average price premium of 2.7% or $23,100 over similar properties without such installations, according to a recent report from property data provider Cotality.
The analysis, published in “Watt’s it Worth: Quantifying the value of solar and energy efficiency ratings in real estate,” underscores the growing influence of energy performance on property valuation, financing, and sales across Australia.
The research, produced in partnership with Proptech Australia and acknowledged by Commonwealth Bank, examined data from more than six million homes. It identified a clear association between energy-efficient upgrades and increased home values.
The Cotality report found that the value uplift from solar systems varies by region. Regional Northern Territory recorded the highest percentage increase at 6.9%, or about $31,350. In terms of dollar value, the premium ranged from $14,093 in Adelaide to $30,459 in Hobart, reflecting differing levels of buyer interest in energy-saving features.
“Our findings highlight that homes with energy and efficiency upgrades are delivering not only long-term energy bill savings and comfort, but also measurable price premiums at a time when cost-of-living concerns are top of mind for Australians,” said Tom Coad (pictured right), senior director, banking and finance at Cotality.
The report also assessed the impact of a property’s estimated energy efficiency rating, a factor not traditionally included in valuation models. Using Cotality’s Energy Efficiency Portfolio Analytics, the study found that each additional estimated NatHERS star rating corresponded to a median national value increase of 1.3%, or about $10,560. The uplift per star ranged from $3,749 in Brisbane to $32,946 in Darwin.
With nearly 70% of Australian homes rated below four stars, the report suggests significant potential for upgrades and highlights risks for owners and investors of lower-performing properties.
“As Australia’s largest home lender, we understand the important role solar and energy-efficient upgrades can play in improving a home’s energy efficiency and helping to reduce energy costs,” said Ben Brazier, retail bank ESG lead at Commonwealth Bank.
“Cotality’s research provides insights into the benefits of solar and energy efficiency improvements. As part of our commitment to helping our customers and supporting Australia’s transition to net zero, we are supportive of research which can help Australians make informed decisions when it comes to the value of a property.”
The Real Estate Institute of Australia (REIA) has also welcomed the findings, noting that buyers are increasingly valuing energy efficiency.
According to Jacob Caine, chair of REIA’s sustainability working group, the findings highlight how cost-of-living pressures are shaping buyer behaviour. “Australians are recognising the dual benefit of energy-efficient homes – reduced running costs and stronger long-term value,” he said.
“We are seeing consumer search behaviour increasingly favour listings that highlight energy efficient features, confirming that performance is shaping buyer demand. These findings cement what we are hearing from buyers: energy efficiency ratings and solar panels are no longer ‘optional extras’ but central to how homes are appraised and sold.”
Currently, the ACT is the only jurisdiction requiring mandatory energy rating disclosure at the point of sale or lease, but other states are moving towards similar policies. New South Wales has announced a phased introduction of Home Energy Ratings, and the national NatHERS scheme is being extended to cover existing homes.
“As the housing market continues to gain value and expectations for comfort, ongoing affordability, and sustainability evolve, the findings from this report highlight a broader shift in how value is perceived, and signal a future where performance is priced as prominently as postcode,” Coad said.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
