How the carbon tax will impact Australia’s property markets

Whether you agree with placing a price on pollution or not, the carbon tax is here and it’s here to stay. So it might be timely to consider what ramifications a carbon tax will have for the property industry and investors in Australia.

According to a recent report in Perth Now, residential energy use is on the rise as we become increasingly reliant on, and attached to, whiz bang gadgets and the latest technological offerings both at work and home.

Even with an increasing focus on energy efficient white goods and appliances, the average size of Australian houses is now bigger than anywhere else in the world and as such, our energy consumption per person has increased.

Then of course there’s the undeniable price hikes the energy companies are slugging consumers with every year, causing many would-be tenants and home buyers to become increasingly conscious of the new energy ratings being applied to Australian real estate.

It’s likely that in the future the carbon tax will be on people’s minds when they go hunting for the their Great Australian Dream.

For a start, there’s the obvious potential to push prices up on homes that have a higher energy rating and therefore the potential to cost less to run, as consumer preferences lean more towards energy efficiency than extra bedrooms.

Some pundits are suggesting that energy efficiency may become one of the most important features when considering a property, with the potential to far outweigh other little luxuries that currently dominate the decision making process, such as ocean views, swimming pools, air-conditioning systems, or that dedicated entertainment theatre room. I’m don’t think that will be the case.

Another consideration when buying property as the carbon tax takes affect will be the potential cost of renovations or refurbishments, along with construction for new homes and redevelopments, which are all likely to increase as the price of materials goes up and more rigorous building regulations are enforced. Read this blog where the HIA gives its views that the carbon tax will add thousands to the cost of new homes.

As such, many industry professionals are anticipating an influx of buyers in the established market, which could have a flow on effect to prices in this segment as demand increases but stock levels remain consistent.

Overall, the carbon tax is likely to have a impact on how Australians evaluate their needs when looking to buy a home. Some will be forced to compromise on size and adjust their “must haves” from all the mod cons we’ve become accustomed to, in favour of energy efficiency. This is particularly true as we acclimatise to our carbon taxed lifestyles of the future which will cost us a lot more to maintain.

For property developers, this means anticipating the future requirements of Australian households in terms of affordability (for both property prices and general living costs) and energy efficiency.

Those of us who rely on real estate to create wealth and are in tune with this structural change in Australian society, and who take a proactive and positive approach, could create a competitive advantage and improve our returns.


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit

'How the carbon tax will impact Australia’s property markets' have 2 comments

    Michael Yardney

    May 16, 2012 Michael Yardney


    Thanks for the question –
    You’re right – The Cairns property market probably has not bottomed, but different segments of the market will perform differently. Since I don’t know your property, I can’t really comment on its future value



    May 16, 2012 Greg

    Hi There,

    My question is about the property market in Cairns.
    Following on from the GFC and the high australian dollar – I purchased a Cairns (Northern Beaches) property at what I thought was a rock bottom price – 3 bdrooms, 2 bathrooms, 5 min walk from the beach. Since then the value has further depreciated by 15%, so I obviously did not purchase at the bottom of the market as I initially thought. What are your views regarding such a property – will it contiune to depreciate in value?



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