Millennials are driving a bigger focus on green credentials and Nightingale-style community focused living, especially as they tend to be owner occupiers rather than investors, according to niche developers who say these types of projects are also outperforming in financial returns.
But sustainability is not in-vogue just for the young and cool. High energy prices mean everybody can benefit from the bill-slashing capabilities of ultra-sustainable buildings. For linguistically trained Cecille Weldon, the trick is promoting “liveability” benefits instead of “sustainability” features when selling the home.
There is a growing body of anecdotal evidence that people are increasingly prepared to fork out more dollars for sustainable homes and that sustainable homes do better on the market.
The shift is driven partly by soaring energy prices, greater environmental awareness in key demographics, and the transition to an owner-occupier property market as investors fade away, industry observers say.
One developer in Mebourne’s inner north, Excelon Group’s Kelvin Taing, says his company just broke the residential price per square metre sales recordin the inner northern Melbourne suburb of Thornbury thanks to home-buyers attracted to sustainability and lifestyle-enhancing features that they are increasingly prepared to pay for them.
The six apartments and two townhouses that make up Clyde Mews surround communal gardens, which are irrigated with rainwater collected on dwellings roofs, Mr Taing told The Fifth Estate.
The apartments and townhouses are also made from recycled bricks and timber, and designed according to passive heating and cooling principles. There are also PV solar panels on every roof and energy and water efficient appliances installed in homes.
The development was designed by Six Degrees Architecture, one of the architectural studios behind the Nightingale model in Melbourne’s Brunswick.
Mr Taing said the recently completed project broke the price record on a square metre basis, according to his agent’s observations of housing prices in the area, achieving $10,000 a square metre for the apartments and $8500 for the townhouses. He said that the apartments “far exceed in price any other one bedroom dwellings in Thornbury” despite not being able to pinpoint a property at number two.
He puts the strong selling prices down to the project’s lifestyle perks that can also be read as enhancing sustainability. For instance, communal gardens that function as extended backyards where you “bump into your neighbours” and energy and water savings that help keep bills down.
“From my perspective, there is one side that is intangible. You feel better when you are doing the right thing by the environment and living in a well-considered, well-built house, rather than a house with paper thin walls. It’s nice to know you are living in something good,” he said.
“The other side is more tangible. You are saving money and paying less, generating some of your own power… this is the tangible value.”
Mr Taing believes that the “sustainability-conscious clientele” are generally prepared to pay more for these features, such as those that typically inhabit Melbourne’s inner north and certain pockets in the inner west. However, he said “other areas are picking up as well”.
In overall terms, home owners are “more likely to care” about sustainability, he says.
“I think owner occupiers are likely to care a lot more because the decision is so close to themselves, whereas an investor will care less.
“This is not to say all investors don’t care about their tenants – we had one investor who bought into our Clyde Mews project,” he said.
Millennials want to go green
Kris Burt from another Melbourne-based development company, Kincaid, is also optimistic that the sustainability features of the yet-to-be-built Due North residential development in Melbourne’s Preston will also do well in the market.
The development’s signature sustainability feature is the Enrich 360, a food waste system that allows residents to turn their scraps into highly fertilised water and soil to be used in common green areas.
This will be the first residential building to use the system, said Mr Burt, and although the system was expensive, he is confident “people will love it”.
“People will pay more for this even though it cost 60 grand to buy. People will love it and pay more for it,” he said.
“We went ahead even though our waste guy said not to because the system is capable of servicing much larger quantities of waste,” he added.
The development also features a 10kW rooftop mounted photovoltaic system to power common areas, rainwater harvesting from all roofs and roof terrace areas, and integrated planter boxes that are automatically irrigated using recaptured rainwater. There will also be five charging stations for electric vehicles, and one bike rack space per dwelling, which will come with the property title.
For Mr Burt, homebuyer interest in sustainability features is undoubtedly picking up, and is driven by Millennials.
“There is no doubt about it, there is strong movement across the board. The younger generation are more inclined towards sustainability and are more focused in on it. It resonates more with them,” he said.
“Younger people will demand it. You’ve got to give them a real sense that you’re not just banging up an old school building… this type of [old school] home will only attract people looking for a bargain.”
He added that in his experience with “downsizer” developments – houses and apartments targeted at people in their 60s and 70s looking to downsize from large family homes – sustainability was less of a concern,
“The feedback was that no one cared,” Mr Burt said.
Liveability sells better than sustainability
Although green credentials might appeal to millennials, Cecille Weldon, the creator of the Banksia award-winning Liveability Real Estate Framework, believes focusing on “liveability” features and lower running costs are more palatable value propositions for most buyers, particularly when energy prices are so high.
“The sustainability industry has put so much emphasis on the environment that they have neglected to say that it also creates a better, healthier and more efficient home,” Ms Weldon said.
“In our space you don’t need to lead with the environment to get the message across. We often forget the most exciting point and that is liveability benefits and decreased running costs,” she said.
Now backed and owned by CSIRO, Ms Weldon’s integrated property marketing framework aims to improve the buying, selling and renting of residential property through real estate agent training and a checklist of common sustainability features.
- See our story CSIRO to the rescue on Liveability program
The 17 easily quantifiable and identifiable sustainability features are all about getting buyers the “biggest bang for your buck”.
“It’s a pathway that’s not judgemental, you start off with insulation and shading and then you just keep going with the other 17 features.”
The goal is to drive a new value proposition in residential real estate, and transform real estate agents from “barriers to catalysts”.
“Agents typically focus on European appliances and granite bench-tops. But these 17 liveability features are essentially hidden features that provide massive value”.
Ms Weldon believes real estate agents are the “missing link” to ramping up demand for ultra-sustainability homes, and liveability is “something they can get on board with”.
“It doesn’t matter what you think politically. We’ve created a neutral system.”
- See our story here LJ Hooker: how to convert real estate agents and start a revolution