Solar panels increase the value of a home, adding between 4% and 7% to a home’s value and helping a property sell faster. Just as any home improvement is an attractive selling point, solar panels are an upgrade that will raise a property’s market value. Buyers see value in any addition that will improve their lifestyle and solar panels save them money and help the environment. In this article we will explain how much solar increases the value of a home, why solar increases home value, why buyers are looking for homes with solar panels, and the factors that affect how much value solar panels will add to a property.
How Much Does Solar Add to the Value of My Home?
Solar panels immediately increase the value of a home by up to 4% according to a 2019 study with buyers willing to pay more for a home that assures lower electricity bills and sustainable living. In 2024, homes with solar panels are selling for up to 7% more. Each 1kW of solar installed can increase the value of your home by up to $6,000. This means a 5kW solar system can add $29,000 to the value of your home. For homes with solar batteries, property prices are enhanced even further.
The Domain Sustainability in Property Report also reported that homes with energy efficient features like solar systems not only sell for a premium but sell faster. That’s because the demand for sustainable housing has grown exponentially in the past few years with more homebuyers valuing energy efficient features as top of their checklist when looking for a home.
Does a Larger Solar System Increase My Home Value by More?
According to research, the number of solar panels a home has directly impacted its value. With solar and sustainable energy a sought after factor for 85% of Australian buyers, homes with larger solar systems show a proportionate increase in value compared to those with smaller systems. The Domain Sustainability in Property Report 2024 found that homes and apartments with energy efficient features like solar panels can sell for at least $6000 more than counterparts without solar panels. At least 55% of homeowners stated they would pay up to $10,000 more for a home with solar panels and 60% would pay at least that much for homes with solar panels and batteries. This makes solar panel installation a worthwhile investment while living in a home and when considering selling.
Why Solar Panels Increase Home Value
There are multiple reasons solar panels increase home value and are more attractive to potential buyers. We explain why solar panels help homeowners sell their properties for more here.
- Trend towards sustainable living: With rising energy prices and the cost of living crisis, the last few years has seen buyers looking towards cheaper alternatives with sustainable options like solar power. A 2024 Origin Energy report found that 12% of people would pay more than 5% for a property with solar power installed.
- Convenience: Solar panels that are already installed are a convenient feature, meaning the new owners will not have to go through the process of choosing, paying and installation. They can just move in and reap the benefits.
- Lower energy bills: Solar panels provide large savings on electricity bills which is often the driving motivation for installing solar systems. Over the life of a system, with quality installation and the correct panels, homeowners can save tens of thousands of dollars.
- Environmental impact: Many homebuyers prioritise environmental impact and are willing to pay premium prices for homes that reduce carbon footprint with solar panels.
- Marketability: With solar panels and energy efficient options a significant factor for many people, homes with solar panels are more marketable, attracting a broader range of buyers and thus a larger property valuation.
- Potential income by selling excess electricity: When a solar system generates too much electricity it can be sent back to the grid. This is known as a solar feed-in tariff, a financial return for installing and using solar power. These tariffs can be a gross feed-in tariff or a net feed-in tariff and are a credit for any unused electricity your system generated.
Financial Benefits of Solar Panels for Property Investors
Solar panels increase the value of a home but they can also be a financial asset to property investors. If you are an investor with a rental property, here are some benefits from installing solar panels.
- Higher rental price: Properties with solar panels or energy efficient features have a higher rental price than those without. Because tenants will be experiencing lower energy bills due to the expense you have paid for a solar system, it is expected that the rental price will be higher. Rental properties with 5 and 6-star energy ratings are leased out at a 3.6% premium, compared to homes with a 3 star rating.
- Tax benefits: Any upgrade to a rental property can be claimed as an expense on tax.
- Solar rebates: As a landlord, you can still take advantage of the solar rebates. The Small-scale Technology Certificate program offers generous reductions in prices Australia-wide.
- Secure long term tenants: Solar panels will help to secure long term tenants as it makes the property more desirable for a tenant to stay, thus providing regular income.
- Increased home equity: While the property is being rented and income generated, rental properties with solar systems continue to increase in value for resale purposes.
- Interest free loan: Rental providers that are eligible can apply for an interest free loan up to $1400 to help reduce the cost of the solar system.
Factors to Consider Before Installing Solar Panels
Before investing in solar panels for an investment property, it is important to consider these factors. Making sure you understand how solar panels work and how to choose the right type and installer is imperative to how much value they will add to a property.
- Location: Where a home is located will impact the weather conditions and the availability of sunlight. A home in a more cloudy location that sees less sunlight will need different types of solar panels to a home in a sunny area. Location will determine the type and size system you need to successfully convert solar energy into electricity.
- Solar panel size: Choosing the right solar system size will impact its efficiency and thus, how much value it will add to the home. To choose the right sized solar panels, take into account your energy consumption requirements and the amount of money you want to spend. It is always advisable to consult with a solar panel expert to determine the right sized solar panel for a property.
- Positioning: The position of solar panels is important as it will determine how much sunlight they capture. To calculate what position the solar panels need to be in for maximum efficiency, the latitude of the home and slant of the roof need to be taken into account.
- Professional installation: Installation quality will depend on the solar company you choose and is imperative when it comes to getting the most out of solar panels. Make sure you thoroughly investigate solar quotes and beware of deals that seem too good to be true. Understand your electricity needs and research retailers, including their history and reviews.
Solar panels can increase home value by between 4% and 7% and help a home sell quicker. Whether you intend to sell a home, or have an investment property, installing solar panels is a wise investment with a plethora of benefits. In this article we have explained how much solar panels can increase property prices and become a selling point, why solar panels increase home value, and factors to consider to add the highest financial return. For further information, contact the experts in solar panels at Tasmanian Safer Solar.
1300 655 808
