CONCEPT AND BARRIERS FOR THE ECONOMIC VALUE OF LOW- ENERGY HOUSES Hao Wu 1 , Robert H. Crawford 1 , Georgia Warren-Myers 2 , Malay Dave 3 , Masa Noguchi 1 1 EDBI Research Group, Faculty of Architecture, Building and Planning, The University of Melbourne 2 Faculty of Architecture, Building and Planning, The University of Melbourne 3 Built Environment, University of New South Wales ABSTRACT This study explores the market revealed price of low-energy residential buildings and why the economic value of low-energy housing products is less transparent in active residential markets. It explores Australian and Japanese conditions and examines the proposition by using embodied energy, operational energy and market price data of selected housing stock in Australia. The study aims to examine a new perspective towards understanding the barriers to ascertaining the economic value of low-energy buildings. In particular, the study examines the composition of energy consumption associated with the residential property life cycle. Operational energy is linked to consumer preference by its inter-temporal value estimate of future expected utility or benefit flow. A ‘low’ embodied energy house is an environmental construct, which does not appear to currently link to short-term market value perception. It does not strongly link to an expected (intuitive) benefit. This ‘gap/disconnect’ creates a barrier to estimating a holistic economic value of low-energy residential property. Keywords: Embodied energy, operational energy, market value, low-energy house INTRODUCTION A house is a form of productive capital: it is productive or performance-valued and typically considered as durable capital. A low-energy house can be defined as a house that uses little or no non-renewable energy over its life. In its most holistic sense, this includes both energy required for operation (operational energy) and embedded in the materials used in its initial construction and on-going maintenance and repair (embodied energy). There are different approaches to analysing energy use, which may be associated with ‘capital’ or with ‘cost or income’. Understanding the economic value of built structure may involve its production cost, value depreciation, and value appreciation – embodied energy is directly relevant to capital formation and durability where operational energy is associated with maintaining productivity of capital. The capital cost should capture all information about house-production-associated energy ideally including the value of ‘embodied energy’ (EE), i.e., the full value of energy resources involved in the formation of the capital. A life cycle approach suits, at least conceptually, the evaluation of total cost of capital formation and total operational cost during the life cycle of a built structure. The challenge lies in ascertaining the market value, whereby the fundamentals is highly dependent on an informed purchaser, their