Why Buyers Paid More for a Cheaper House to Run

A four-bedroom house in Canberra passed in at auction at two million dollars, then sold two weeks later for 2.4 million. The thing buyers kept asking about was not the floor plan. It was the power bill.

The property sat on 1058 square metres in Red Hill, in Canberra's inner south. Four bedrooms, three bathrooms, a footprint that is not especially large, with a lot of living space packed into it. Over a three-week auction campaign it drew exactly one registered bidder and passed in at two million. The agent then ran a two-week expressions of interest campaign. Five separate parties made offers. It sold at 2.4 million.

Some of that gap is what happens when a failed auction resets everyone's expectations and a different sale method finds the buyers an auction had frightened off. I would not put the whole four hundred thousand down to anything clever. But the recurring question through the second campaign was not about schools or land size.

The number that moved the price

The house had 15 kilowatts of solar, a seven-kilowatt battery, double glazing, and an energy rating of four and a half stars. It also carried a transferable solar rebate worth around two thousand dollars a year to the owners. On an estimated annual energy bill of about eight thousand dollars, the household was paying nothing and receiving two thousand.

So roughly ten thousand dollars a year of household cash flow that never leaves the account.

Buyers said, more or less directly, that they could pay more for this house because they would spend less to live in it. Some framed it as paying the mortgage down faster. Others framed it as borrowing capacity. Either way, the reasoning was the same: a fixed annual saving attached to the building itself, not to the owner, and one that transfers on settlement.

Run the arithmetic without any compounding and it is a hundred thousand dollars across ten years, against a purchase price of 2.4 million. Call it four per cent of the price, sitting in the roof.

One caution, and it is a real one. You cannot promise a specific household a specific saving. Double glazing does nothing if the windows are open all winter, and a teenager who takes forty-minute showers will undo a good hot water system on their own. The honest version is that the building has a capacity to cost less to run, and the household decides how much of that capacity it uses. That is still worth paying for. It is just not a guaranteed dollar figure.

What a lender currently does with a low power bill

Almost nothing. This is the part most buyers get wrong.

Banks assess living expenses using a baseline matrix built from income, postcode, age and number of dependants. They apply a floor. If you declare that you spend less than the floor, they use the floor anyway. If you declare more, they use your higher figure. So the household that genuinely pays zero for electricity is assessed as though it pays the same as its neighbours.

No Australian lender is yet saying: this house has a battery and a four and a half star rating, therefore your limit rises. Which means, right now, the entire benefit of an efficient home accrues to the buyer and none of it is priced by the lender. That is a gap, and gaps of that shape do not usually last.

Australia is late to disclosure, not exempt from it

The reason a Canberra buyer reasons this way is that Canberra buyers have been shown the number since the late 1990s. The ACT has required an energy efficiency rating at the point of sale for close to thirty years. When the information is on the contract, the market prices it. When it is not, the market ignores it.

That is changing. Energy ministers released a national Home Energy Ratings Disclosure Framework in 2024, with a second version extending it to apartments and apartment buildings, and the accompanying cost benefit work found a net economic benefit to mandatory disclosure at point of sale. The national rating scheme has been expanded so that existing homes, not only new builds, can be assessed, with something in the order of seven million dwellings eligible. New South Wales is running voluntary disclosure from the middle of this year, explicitly to work out when to move to a mandatory scheme. South Australia is under similar pressure.

In most of Europe, an energy performance certificate at sale or lease has been unremarkable for well over a decade. Parts of North America require a home energy score at listing. Australia is not going to be the exception. It is going to be late.

The second force, and the one nobody is talking about

Disclosure will not arrive because buyers demanded it. It will arrive because the people lending against the asset need the data.

In March this year the prudential regulator published a stress test on home insurance. It found roughly one in seven Australian homes is uninsured today, rising to about one in four by 2050 under both of its scenarios. Between 2015 and 2024, a third of Australian losses from natural catastrophes were uninsured. The framing in that report matters more than the numbers: insurance is a precondition of a mortgage, mortgages are the largest asset class on Australian bank balance sheets, and a widening protection gap is therefore a credit risk sitting inside those portfolios. The Reserve Bank has made the same point in plainer terms. Less affordable insurance means more underinsurance, which lowers the credit quality of existing loans.

Energy performance and weather resilience are not the same risk. A double-glazed window will not save a house from a flood. But they are answers to the same question a lender has started asking, which is how this particular building performs and what it costs to hold. Once a bank needs building-level data to price its own risk, disclosure follows. That was the sequence in Europe. It was not consumer pressure. It was capital.

How I assess this in Melbourne

I do not know of another buyer's advocate in Melbourne who scores a property on what it costs to run.

In practice that means orientation and glazing, whether there is any wall insulation at all, what the heating actually is and what it costs to run against a reverse cycle alternative, roof aspect and whether solar is already there or viable, whether the switchboard and the supply can take a battery and a car charger, and in apartments, whether the owners corporation rules quietly prevent all of it. Then the retrofit cost, as a number, before we decide what to offer.

This matters more here than the Canberra example suggests. Much of the inner and bayside stock I work across is pre-war weatherboard and solid brick, single glazed, with nothing in the walls. The cost of that shows up every winter and appears nowhere on the contract of sale.

It does not mean I steer clients to the efficient house. A cold period home in Elwood or Hampton can be an excellent buy. It means the cost of fixing it goes into what we are prepared to pay, rather than arriving as a surprise in the second July.

What this means if you are buying now

Melbourne has no rating on the listing. The information exists, it is simply not disclosed, and that is the interesting part of this window. A buyer who calculates running cost today is bidding against buyers who are not calculating it at all. Once disclosure becomes standard, that difference gets priced into the asking figure and the advantage disappears into the market.

If you are looking at something now, send me the address and I will give you a read on what it will cost to hold, not only what it will cost to buy. You will get one of two answers: what I would pay for it, or why I would walk away.

Common questions

Is energy efficiency priced into Melbourne property?

Not yet, in any consistent way. Melbourne listings carry no energy rating, so most buyers have no basis for comparison and a market cannot price what it cannot see. The ACT is the exception, and results there show buyers paying a premium where running costs are documented and transferable.

Will a bank lend me more for an energy efficient home?

Not currently. Lenders assess living expenses against a baseline matrix built from income, postcode, age and dependants, and apply a floor to it. A household with no power bill is still assessed as though it has one. The saving is real, it simply accrues to you rather than to your borrowing capacity.

When will energy rating disclosure become mandatory in Australia?

No national date is set. The ACT has required disclosure at sale since the late 1990s. Energy ministers released a national Home Energy Ratings Disclosure Framework in 2024, extended to apartments in a second version, and New South Wales began voluntary disclosure in 2026 to test the path to a mandatory scheme. The direction is settled. The timing is not.

Does solar add value when you sell?

It can, though the amount depends on the system rather than the fact of it. A large array with a battery and a rebate that transfers to the new owner is a documented saving and buyers pay for it. A small ageing array with no battery and no transferable benefit is closer to a maintenance item than an asset.

What should I check on an older Melbourne home?

Orientation and glazing, whether there is any wall insulation, what the heating is and what it costs to run against a reverse cycle alternative, roof aspect and solar viability, and whether the switchboard and supply can take a battery or a car charger. In apartments, check the owners corporation rules before assuming any of it is permitted. Then price the retrofit before you decide what to offer.

This is general information only and does not take your personal circumstances or objectives into account.