The Unconditional Blog

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Can eco real estate command a premium?

Posted on: August 25th, 2008 | Filed in Green

New Zealand has suffered a double whammy this winter – spiraling consumer price inflation and a pretty nasty winter – to put it mildly!

The image we like to think of for this country is that of bright rich sunlight and warm summer days on the beach and yet for a lot of us NZ means cold winters in houses which many people around the world would be staggered to hear are poorly heated at best and at worst – not heated.

I recall fondly living in Sweden some ten or fifteen years ago and everyone I spoke to about the country believed that to survive their sub-arctic winters that Swedes must be hardy folk who can endure cold – no such thing! They live in communally heated, super insulated houses, stepping as they do into their “heated-over-night” cars and travel to underground car parks at work. They wear sensible outdoor winter clothes which they shed when they come back inside. The lesson is build for the conditions; and for NZ that should be cold winters and warm summers. This is a key part of eco-design. Capturing and using the best of materials and natural features such as passive thermal heating through solid concrete walls and floors, double glazing, adequate insulation and solar heating.

These aspects of eco-design are becoming valued by some countries far more than fancy architecture and double garages. I was appreciative of the following article sent to me by a passionate believer in eco-house design and construction. He works for Right House who provide advice and solutions both for new build and also renovations and improvements.

The article from Seattle should gain some traction as it provides evidence that environmentally certified homes sold for a 5.9 percent premium on a square foot basis. As Aaron Adelstein, Executive Director of Built Green says:

“Until now, the idea that people are willing to pay more for environmentally certified housing has been mostly based on anecdotes,” “Now we have the first hard data to back up what many of us have believed for a long time – green sells for more.”

It makes sense a house environmentally certified to provide a warmer, more comfortable environment with lower running costs should attract a premium, or at least be easier to sell as it has a distinct point of difference. The only question for kiwis is how can we evaluate independently the energy rating of a home?

Our own governement agency EECA has a Home Energy Rating Scheme which is provided through certified inspectors, although with only 8 to cover the whole country at this stage you may have to be patient to get an assesment undertaken. Although in some ways the tangible benefits of proper insulation and energy saving are far more valuable than a certificate until the certification process gains some traction – I sense a dilemma of the “chicken and egg”.

Article Discussion

  1. deon says:

    This may sound skeptic mate but honestly what is the green option. Everything has its ups and downs and what may save you a few dollars may cost hundreds up front and then if you want to go down the argument of how much it costs to create the “green” stuff. I have studied the weather systems in depth and understand how it works and I believe that its not unusual. Many thousand of years ago there was just as much CO2 in the atmosphere as now. Uncontrolled fires used to ravage this planet, now we have firefighters to put them out and control them but have cars that spew out exhaust fumes.

    Everything works in a wave motion and what goes up will come down and vica versa. Just like the real estate market. So in my opionion I do not believe that all this green image thing that is going on round the world will change a heck of alot. Heck the greenest way to generate energy is nuclear fusion. But the waist is a problem.

    There is alot we need to learn on this. Humans have been living through many ice ages and warm ages. We will find a way to survive what every happens in the future.I hope Im not to far off topic. Its just a touchy topic for me.

  2. Deon

    An interesting perspective. I think the issue here is the generalisation of the term green or eco. It is used to cover a multitude of issues, causes and agendas.

    The key thing for me is living environment, if that makes a person feel good about their carbon footprint all well and good, if it provides a healthy and comfortable home to live in then society benefits in a multitude of ways. I believe we have paid too little attention to smart design and good materials in our houses for too long and are not just paying the price through leaky homes, but also in the warmth and comfort of our homes.

  3. deon says:

    I agree with you there. Trying to build cheap homes and cut corners is the reason for the leaky homes and cold drafty homes. We have technology and the ability to create very warm homes. And it only costs marginly more for that compared to cheap cold and damp homes.

    My mother lives in karamea, she is an organic specialist and is definately a greeny. She built here house on a block of land in the middle of the bush we when I was 17. She built with her partner a very sound solid and one of the warmest homes I have ever been in. Now its almost completely eco and self sustained. But the cost to get it like this for the gear cost almost as much as the house did. BTW the house is completely made of native recycled timber. And there is no artificial insulation. All comes from the earth.

    It can be done but it takes a little more effort on the building side and a little extra time. Then we wouldnt have a problem of shotty rotton homes!

  4. Jared says:

    I have always been a believer that all new houses should have solar panels on the roof.

    Correct me if this is not a viable option (as I don’t know the price of solar panels and the exact amount of energy they produce) but would this not do wonders for our carbon footprint as a country?

  5. Jared

    Solar heating makes sense from so many perspectives, except for financial return. As I understand it (and I do not have accurate numbers in front of me) the capital cost of equipment and installation takes around 6-8 year to repay – a big call for anyone these days.

    Two factors will likely see greater adoption (i) economics and technology – this will drive down costs especially as photovoltaic cells are beginning to be produced in a scale that dramatically reduces cost; and (b) the government does have a subsidy for installation although the last I read of the scheme the uptake had been appalling.

  6. Jared says:

    Alistair.

    Yes, six years is a long time. It looks like the government was subsidising up to $1000?

    Perhaps instead of subsidising a lot, they should pay for a few?

  7. Mike says:

    I agree with the article, NZ homes have been built as cheap as possible cutting as many corners as possible in order for developers to make a quick buck. Total cost of ownership when purchasing a property doesn’t seem to be considered ie what does it cost to live in the house over a time period. NZrs move houses so often that the cost of building in eco design is never recovered. This goes for retrofitting solar water heaters etc also, the owner has moved long before there is any real return.

    Hopefully this situation will gradually change and prospective house buyers will reject houses that don’t meet eco standards, but this will take several generations as 99.9% of current stock would be considered by those living in more enlightened countries as being not fit for purpose.

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