greener homes saved borrowers up to 115,000 dollars
Greener homes could see home loans paid off faster, and thousands of dollars saved, according to new research. Image: Canva.
  • KPMG's analysis found owners of Green Star Homes can reap major financial benefits.
  • A Green Star Home energy savings overrides its high upfront cost.
  • Some lenders offer lower interest rates for Green Star Homes.

Independent analysis by KPMG has found owners of Green Star Homes can expect to reap a host of financial benefits.

The data illustrates that green homeowners are able to pay off their home loans faster and save up to $115,000 in interest costs on an average sized home.

“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,” said KPMG partner of ESG advisory and assurance, Mark Spicer.

Savings outweigh the cost of sustainability

KPMG’s analysis compared a standard project home in Canberra, Melbourne, and Sydney with homes that incorporate all of the particulars required to meet the Green Star Homes Standard, such as solar panels, double glazed windows, improved insulation, heat recovery ventilation system and air conditioning.

The modelling showed that while a Green Star Home typically increased loan repayments by $38 to $84 per month, this was offset by savings in energy costs of $90 to $140 per month.

Under the conditions modelled in the research, 60%, 56% and 56% reductions in first year energy consumption were calculated for Sydney, Canberra and Melbourne respectively.

Green Building Council of Australia (GBCA) Davina Rooney said while the energy features in a Green Star Home mean the purchase price is higher, the immediate savings in energy bills covered the monthly loan costs.

“We have always known that a Green Star Home is better for the planet, and that living in one is better for our health. Now we have independent modelling to show that it is also better for your hip pocket.”

GBCA CEO, Davina Rooney

“With many Australians experiencing rising cost of living pressures, there may be fears that choosing a sustainable home may not be financially viable,” she said.

“But this data shows, for the first time, how the long-term financial benefits far outweigh the initial upfront costs.”

Moreover, Rooney added that 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 0.5% reduction for green building practices, the long-term savings would be significant.

Many lenders such as CBA, NAB, and others also offer loans at a lower base variable interest rate, if the property meets the energy efficiency criteria.

“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 market, financial benefits for the consumer are estimated to increase over time.

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