QBE Housing Outlook reveals consumers’ increasing green home choices

21 Oct 2022

The 2022-2025 Housing Outlook: Green Edition, commissioned by QBE Lenders’ Mortgage Insurance and released today, has revealed that consumers are increasingly making greener housing decisions, generating subsequent home value increases of up to 5-10 per cent¹.

Authored by BIS Oxford Economics, the Housing Outlook examines the choices Australians are making when buying, building or renovating their homes to become more sustainable, and the environmental impact of these decisions. The report coincides with QBE LMI’s launch of a 5 per cent rate reduction for lenders’ mortgage insurance for homes purchased with a green mortgage through its participating exclusive banking partners*.

The Housing Outlook finds that increasingly ambitious building regulation is leading to changes in construction of new homes to reduce future emissions, including the rising popularity of insulation, double glazed windows and lighter coloured roofs. Beyond construction, households are adopting more energy efficient appliances, heating and lighting solutions, while financial institutions are offering incentives to encourage green home ownership.

Increasing home energy efficiency is the most effective way for consumers to reduce their emissions and future-proof one of their biggest assets, says Pat Priest, General Manager, QBE LMI.

“An energy efficient home uses 66 per cent less electricity, 51 per cent less water and produces 62 per cent fewer greenhouse gas emissions². With Australia’s residential sector producing 15 per cent of the nation’s total greenhouse gas emissions³, this not only offers huge benefits to the environment, but to consumers, who stand to save on energy costs by making these changes.

“Just by installing a 5kW rooftop solar system, the average Australian household could save $909 per year on their electricity bills. Australia has the highest uptake of rooftop solar energy globally⁴, and this is only expected to rise, so understanding the environmental and financial benefits of future-proofing their homes will enable consumers to make better choices.”

Creating a sustainable home

When building a green home, LED lighting and increased insulation are the most commonly installed energy saving initiatives reported by builders, architects and designers. LEDs use 75 per cent less energy than halogen light bulbs and last 5 to 10 times longer⁵, while effectively insulating the ceiling, walls and floors of a typical home saves 45-55 per cent on heating and cooling⁶.

While increasing in popularity, adoption of lighter coloured roofs, double glazed windows, and solar or heat pump hot water systems remains relatively low overall. Although more expensive to buy, solar and heat pump hot water systems use 60-70% less energy than a conventional electric system, and reduce associated greenhouse gas emissions by around 65-70 per cent⁷.

Australia has the highest uptake of rooftop solar energy in the world, with nearly 3.2 million installations, or around 30% of all homes, as of June 2022⁴. The most significant savings for consumers come from reduced usage costs and Feed in Tariff (FiT) credits, giving households savings on their energy bill by contributing energy back to the grid.

Meanwhile, the cost of energy efficient household appliances has lowered due to technology improvements and higher production levels, increasing accessibility for consumers. More efficient front loader washing machines have increased their market penetration from 9 per cent in 2000 to 47 per cent in 2020, and now represent 67 per cent of the washing machines offered on the market⁸.

Green finance

The report notes that banks are increasingly offering green mortgages to further encourage sustainable housing, while energy retailers are offering renewable and carbon offset products for environmentally conscious consumers.

The expansion of green home loan offerings gives households the opportunity to access discounted interest rates if they build, buy or renovate a home to meet certain energy ratings, with criteria including efficient hot water systems, electrified fixtures and appliances and rooftop solar systems.

“Making it more affordable to own a green home is a key enabler for consumers to switch over to energy efficient choices,” said Ms. Priest. “This is why QBE LMI has just launched a 5 per cent rate reduction for LMI to benefit customers seeking to buy, build or renovate into a green home. Customers who secure a green mortgage through our current participating exclusive partners NAB or Bank Australia may be eligible to benefit from the rate reduction, helping to get them into a green home sooner.”

“QBE will be directing 100 per cent of LMI premiums received into social and environmental impact investments through the Premiums4Good initiative, helping to make a difference to the communities and environment we live and work in and help achieve our purpose of enabling a more resilient future.”

National Housing Outlook

The report also includes an analysis of and predictions for the national property market, with a market slowdown expected to be widespread but varied across states. Sydney is expected to experience the largest decline due to the combination of strong recent rises in interest rates, high household indebtedness and elevated construction cost growth. At the other end of the spectrum, a buoyant resource sector and a recovery in population flows is expected to support the housing market in Perth.

Unit prices are forecast to decline less than houses, given less exposure to affordability issues with the price growth in detached houses over the last two years outstripping units. The rise of working from home boosted demand for larger dwellings, however this is beginning to slow as workers move to hybrid working arrangements.

Acute pressure in the rental market is set to be sustained by the return of overseas migration, spurring double digit growth in asking rents across many CBD markets. Resulting yield growth is anticipated to support investor demand.

Much of the price decline is expected to occur over the remainder of 2022, accelerated by the rapid series of rate rises to limit inflation. Prices are expected to recover beyond mid-2023 as interest rate rises are expected to stabilise.

To download the 2022-25 Housing Outlook: Green Edition, please visit: https://www.qbe.com/lmi/housingoutlook

For more information:

Emily Connell
External Communications Specialist
QBE Australia
+61 422 907 484
Email: emily.connell@qbe.com

* The green LMI rate discount is available to our participating exclusive partners on green mortgages that they offer and which meet their and QBE LMI’s green mortgage eligibility criteria. Available where the LVR is greater than 80% and is subject to QBE LMI approval. Minimum LMI premium applies.