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Energy-efficient upgrades put 35% premium on rental returns
Landlords who prioritise energy efficiency could see their returns boosted by up to 35 per cent, as Australians increasingly seek out green features for comfort and cost savings.
New data showed that demand for energy efficient features has been rising, creating a golden opportunity for higher sale prices and rental returns.
The Efficiency Edge report, by Cotality and the Real Estate Institute of Australia (REIA), found that ‘green’ properties could be sold for 66 per cent above local suburb medians, while rental returns could rise up to 35 per cent.
According to REIA President, Jacob Caine, energy efficiency properties were becoming an important factor for buyers, sellers, landlords and tenants alike.
"Consumers are increasingly interested in understanding how a home will perform, not just what it looks like or where it's located,” he said.
Cotality said buyers and renters have been placing greater weight on features that influenced energy use as other costs of living continued to rise.
“For most buyers, renters and investors, home performance is about more than sustainability. It affects comfort and the ongoing running costs of owning or occupying a home,” it said.
Higher premiums
The company’s data showed that energy efficient homes tended to attract stronger demand and price premiums in many markets.
Cotality analysis from 2025 of more than six million Australian homes found houses with solar panels achieved prices around 2.7 per cent higher than comparable properties without it.
Further, each additional Nationwide House Energy Rating Scheme (NatHERS) star was associated with an estimated average 1.3 per cent greater value nationally.
Cotality’s latest report also found multiple examples where a property’s median price had been boosted by energy efficient features.
One property in Cygnet, Tasmania, sold 66 per cent above the median for comparable properties, with features including thermally broken double glazing, an insulated concrete slab hydronic heating and a fully integrated battery system.
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“The home was not only more efficient, but more comfortable, more resilient and less exposed to rising household energy costs,” Cotality said.
Another dwelling, in Mount Hawthorn, Western Australia, achieved a 14-24 per cent boost in its sale price compared to similar properties, while rental returns were around 31 per cent higher.
Cotality said the home offered buyers natural light, cross-ventilation, lower running costs and a high level of liveability despite its smaller size.
Energy efficiency was achieved through thermally broken double glazing, crossflow ventilation, strategic shading and polished concrete flooring, while a wood burner provided efficient heating during winter.
Disclosure could unlock opportunity
According to the report, governments nationwide have been considering the benefits of mandatory energy efficiency disclosure, which would unlock new opportunities in property sales and rentals.
Research from the Australian Government's Behavioural Economics Team found 86 per cent of people surveyed considered it important to see a home's energy rating when buying, and 75 per cent when renting.
The ACT has mandated energy efficiency disclosure in property sales since 1999, while NSW is conducting a trial ahead of a possible mandatory scheme, and Victoria will have minimum energy efficiency standards for rentals from next year.
Cotality Head of Sustainability Solutions, Richard Griffiths, said that enabling better access to home performance details would help consumers make better informed decisions.
"For most Australians, energy performance isn't primarily about sustainability. It's about living in a home that is comfortable and affordable to run,” he said.
“Putting them in buyers' hands will give added choice and transparency and make energy efficiency part of the conversation in the same way as land size or the number of bedrooms,” he concluded.
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