01/08/2018
Banking on Energy Efficiency.
There is a lot of discussion lately about the fluctuations in house prices in Australia, and exactly what is happening that may be causing a drastic drop.
There are usually a lot of factors that can affect house prices, such as employment, interest rates and the economy. We have seen a tightening of credit lately from the big banks as they undergo investigation by the Royal Commission. Mortgage repayment capacity and eligibility criteria have been changed. This may be a reason for the current dip in house prices as well.
While this may be challenging to some, it certainly presents new opportunities to building energy efficient homes. Built to Perform, the new report produced in partnership by Australian Sustainable Built Environment Council (ASBEC) and ClimateWorks Australia, shows that stronger energy performance in new buildings can, between now and 2050, save the Australian economy up to $27 billion in energy costs. For households, this could translate to savings of up to $900 per year.
As well as lowering emissions to the tune of 78 million tonnes, and helping Australia meet its Paris Climate Change agreement, it's also good news for the Australian housing market.
Major banks in Europe have launched "green mortgage" products. This is based on the simple premise that homes with lower energy bills are a less risky investment, for both purchasers and the banks who extend them credit in order to buy. Barclays of UK offered a significant discount rate for energy efficient properties.
NAB recently released the first offering of Climate Bond Certified investments, with a $2 billion offering, including $300 million based on mortgages secured by certified energy efficient houses.The response was huge, with NAB finding themselves oversubscribed by a factor of more than two to one. With billions of dollars in Australian superannuation money invested in ethical or environmentally focused funds, all the evidence suggests that this will be a growing market not just for home loan providers but for big investors. With energy prices tipped to keep rising, simple energy efficiency measures like improved insulation, or better orientation can help to keep a lid on future living costs. At a time when Australia’s ageing power infrastructure needs investment, this reduced demand could also save the nation up to $7 billion in costs to maintain and replace energy infrastructure.
The take home message? When it comes to credit to purchase property, sustainability itself is likely to help keep the Australian building industry sustainable.