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When money speaks louder than ideas

Green homes cost more. But buyers have been reluctant to pay a premium to go green.

The recent run of gas and electricity price hikes may be casting a black cloud over the pockets of most consumers, but for those working to raise the profile of green housing it has a distinctly silver lining. They hope that faced with ever-larger power bills, potential homebuyers may become increasingly sensitive to the savings achieved in energy-efficient houses.

The statistics are compelling enough. Properties conforming to the UK Building Research Establishment’s Ecohomes “very good” standard of environmental performance, for example, which covers not only a home’s energy efficiency but also water efficiency, waste generation and access to public transport, can cut their carbon emissions by 30 per cent and water use by 40 per cent, according to Paul King of the UK’s World Wildlife Fund (WWF).

Yet most homebuyers, from the US to the UK to Australia, aren’t particularly concerned with energy efficiency. They don’t see the cost savings as real, and they’re not prepared to pay a premium for higher building standards. “There is neither the information nor the real performance out there to drive their interest,” King says.

Others, agree. “When people go to buy a house, very few raise the question of the environment because it’s not an issue for them,” says Gopal Ahluwalia, an economist at the US’s National Association of Home Builders.

“People understand that climate change is a major issue, but they haven’t yet tied it in with their own consumerism,” adds John Slaughter of the UK Ноше Builders Federation.

Even Ian Morris of developer Taylor Woodrow - which has been involved with sustainable schemes such as the Green Building in Manchester acknowledges that there’s “little consumer pull in greenness”. Buyers may be interested in a eco-friendly home, but it must first satisfy all their other requirements, and they don’t want to pay extra for it, he says.

WWF’s One Million Sustainable Homes campaign in the UK, which King heads, last year conducted a survey that addressed the barriers to acceptance: the fact that developers think consumers aren’t interested; the belief that green housing involves too much of a price premium; and the current lack of fiscal “carrots” for owners of eco-friendly homes. It showed that 87 per cent of prospective homebuyers would like better information about the environmental impact of houses, and 84 per cent would pay 2 per cent more for a better-performing property.

But it is unclear whether those sentiments will translate into green homes gaining mainstream acceptance. In the US, where the movement is more established, 1.4,000 eco-friendly houses were built in 2004, according to the NAHB, with projects across the country, not just in states plagued by energy and water crises. But about half of the respondents to a recent survey said that, although they were concerned about the environmental impact of their new home, they wouldn’t pay more to lessen it. Only 17 per cent would. And most thought a promised reduction of $1,000 a year on heating bills justified a premium of only $5,000.'

'So how much does it cost the developer to build green? There’s some dissent on this front. Paul King talks of “an extra 1-2 per cent” of the build cost to build to the “very good” standard in the UK. Julian Brooks quotes a premium of 34 per cent of build cost, while in the US, Gopal Abluwalia estimates 3-5 per cent of the sale price.

But anecdotal evidence suggests that eco-friendly properties are sold at much higher premiums than that. For example, resale apartments in the “zero energy” development known as BedZed in Beddington on he outskirts of London are marketed at 10-20 per cent more than the local average for comparable units, according to Jason Cheeseman, manager of estate agent Haart in nearby Carshalton. “The vendors presume they’ll fetch a premium, and the smaller units will certainly sell at that price to the right buyers - but the average buyer without environmental interests can’t see the point of paying over the top, and they will not save that much on fuel bills”,

King thinks education will be the key, and cites the UK’s Home Energy Ratings, a compulsory A- to-G system to be introduced in January as part of the Home Information Pack to be prepared by