The rental market has changed, and smart investors can already feel it. Tenants are staying longer, their expectations for quality are higher than ever, and one of the most striking shifts I’m seeing is the importance they now place on energy efficiency. It’s no longer a nice-to-have. For many tenants, it has become the deciding factor.

Research from PropTrack’s Renter Reality Report shows that 34% of renters would be willing to pay more for a property with energy-efficient (EE) features. That’s more than one in three tenants placing a premium on homes that can reduce energy bills and improve comfort.

For investors, this trend can’t be ignored. Less efficient homes may sit on the market longer or achieve lower rents, while energy-efficient properties are leasing faster and attracting stronger demand.

The question then becomes: do you spend time and money retrofitting an older property, or consider a newer one that already meets or exceeds modern standards? Retrofitting can work in the right circumstances, but it often comes with cost and disruption. 

Newer homes, on the other hand, start from a higher baseline of efficiency, which reduces the likelihood of expensive upgrades and aligns more closely with where tenant demand and regulation are heading.

Why renters value energy efficiency

Over the past five years, renters across Australia have faced steep increases in housing costs, according to PropTrack. In capital cities, annual rents have risen by an average of $10,920, while in regional areas, renters are paying $9,360 more per year.

With energy prices climbing at the same time, households are under real pressure to cut costs wherever they can. Energy-efficient homes stand out as a practical way to ease that burden.

Features like better insulation, double-glazed windows, efficient heating and cooling, and modern appliances can significantly reduce utility bills. For tenants, those savings translate into more predictable living costs and greater comfort, making efficiency a major drawcard when choosing a home.

What does this mean for investors?

Energy efficiency doesn’t just benefit tenants, it delivers stronger outcomes for investors. Properties that meet modern standards are easier to lease, attract a wider tenant pool, and carry less risk of falling behind as regulations tighten. More than a tenant preference, efficiency has become a marker of quality in the rental market, shaping both cash flow and long-term asset performance.

Here’s why smart investors are making it a priority:

Reduced upgrade costs

New builds are designed with efficiency from the start, which means investors are far less likely to face costly retrofits or upgrades as standards evolve.

In some states, new builds are mandated to meet or exceed current efficiency benchmarks. In Victoria, for example, new homes are now required to be built to 7-star energy efficiency under the NATHers rating system.

The state government has also introduced phase changes to the energy efficiency standards required for rental homes, which will begin from 2027.

Newer properties that are built to higher efficiency standards help investors stay ahead of compliance changes while keeping pace with what renters increasingly value.

Stronger rental demand

With one in three renters willing to pay more for energy efficiency, new homes are more attractive in a competitive market. That means lower vacancy risk and access to a wider tenant pool.

According to PropTrack, more than half of renters say they feel they have little control over efficiency in their current homes – a frustration that drives demand for properties where those features are already built in.

Lower running costs for tenants

Homes with modern insulation, energy-efficient appliances and updated heating or cooling systems can significantly reduce running costs. According to a July 2025 report from the Institute for Energy Economics and Financial Analysis (IEEFA), Australian households could cut their energy bills by up to 94% in some capitals with these features.

The good news for investors is that these savings are already built into new homes. No need to retrofit – new builds deliver the lower bills tenants want from the start.

Capital growth potential

Energy-efficient homes are not only cheaper to run but also consistently attract higher resale values. Domain’s Sustainability in Property 2025 report shows that in 2025, EE houses sold for 14.5% more (an average increase of $118,000) than comparable non-EE homes, while EE units commanded a 12% premium (around $75,000).

In some markets, the premium is even higher. Melbourne EE houses sold for nearly 24% more, while Perth EE units fetched a 19.2% uplift.

Buying new EE-compliant properties means you can access these capital growth opportunities without needing to invest in upgrades. It also positions your portfolio for stronger long-term returns in both the rental and resale markets.

Investing in an energy-efficient property

New homes are generally built to today’s higher energy standards, which lowers the risk of costly retrofits and helps ensure compliance as regulations evolve. For investors, that means less uncertainty and greater alignment with where the market is heading.

Efficiency also carries a broader benefit: it strengthens tenant appeal and supports the long-term performance of your portfolio. Properties that reduce running costs and offer greater comfort are more competitive in the rental market, while also being better positioned for future growth.

Are you ready to future-proof your portfolio?

At SAFORE, we help investors align with the next wave of tenant demand by focusing on energy efficiency, compliance, and long-term growth potential. With the right strategy, you can secure properties that attract stronger rental demand today while positioning your portfolio for resilience and future capital growth.

Call us on 1300 69 77 67 or book your discovery call to explore how strategic property advice can give you the edge.