Do features such as solar hot water or more durable building materials add financial value to a house? BRANZ is investigating.
This study looks at how builders, designers, real estate agents, valuers and home buyers value sustainability and resilience features. The first-year findings from a two-year project are reported in BRANZ Study Report SR333 (2015) Valuing sustainability and resilience features in housing.
Sustainable homes have features that reduce their environmental impact. These features could include windows with improved thermal performance, energy-efficient lighting or heat transfer kits, but also other elements such as proximity to public transport.
Resilient homes, with features such as more durable building materials, perform well in disasters such as flooding or earthquakes, with lower recovery times and costs.
The research shows that:
home buyers seldom value sustainability and resilience features over things such as a nicer kitchen,
there is little help for people to value these features, and
the premium paid on the resale of a house may not accurately reflect the value of the sustainability features in the home.
Builders from 10 large firms were interviewed across Auckland, Christchurch and Tauranga. They did not generally see their role as giving advice, but as delivering what clients wanted (with exceptions based on things such as personal experience).
Few clients asked about sustainability and resilience, preferring to spend on kitchens and bathrooms. Builders mostly felt that sustainability and resilience features added little extra value, although most builders acknowledged not having much technical expertise in this area.
Agents and valuers
A survey of real estate agents and valuers focused on solar heating systems as a well-known and discrete example of a sustainability feature.
Agents generally believed that solar hot water and photovoltaic (PV) systems added between $2500 and $3200 in value to a house respectively. This is below installation cost.
Valuers’ average estimates were higher, at $2400 to $3700 for solar hot water and $4300 to $6500 for PV systems.
A pilot study commissioned by BRANZ looked at 1031 house sales in Nelson, including 13 houses with solar water heating. The price difference, with all else held equal, was the premium for solar hot water.
Houses with solar hot water had a premium of 1.35% of house value, or an average $7250 per house, although the sample size was small and further work needs to be done.
Year two of the BRANZ study will:
calculate whole-of-life cost and benefits for sustainability and resilience features,
further quantify how much the market is willing to pay for these features (versus what they are worth), and
pilot an approach to upskill builders, real estate agents and valuers on the net benefits of these features.
BRANZ Study Report SR333 (2015) Valuing sustainability and resilience features in housing can be downloaded from www.branz.co.nz.