Market response to the public display of energy performance rating at property sales

Jensen, Ole Michael; Hansen, Anders Rhiger; Kragh, Jesper

doi:10.1016/j.enpol.2016.02.029

Cited by 69 publications

(45 citation statements)

References 5 publications

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“…Further studies in Europe, Australia, the United States, and Singapore confirm findings that residential buyers are willing to pay a premium for energy efficient housing [5][6][7][23][24][25][26][27][28], although some papers have produced more mixed results [11,12,29,30].…”

Section: Literature Reviewsupporting

confidence: 48%

Buildings Energy Performance in a Market Comparison Approach

et al. 2017

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Abstract:The current regulations on the energy certification of buildings represent for the real estate market and the building sector a real cultural revolution. In recent years, the focus on the energy efficiency of buildings has grown exponentially. It is therefore necessary that the property valuations and methodologies used for this purpose bear in mind the energy quality of buildings. This study aims to determine the contribution of an energy performance feature to the real estate property value. This information can help, on the one hand, to understand the energy savings and the corresponding savings income in the property management and, on the other, to control the air pollution from CO 2 emission reduction. The energy performance hedonic price and the CO 2 emission price are appraised in the Market Comparison Approach (MCA).

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Section: Literature Reviewsupporting

confidence: 48%

Buildings Energy Performance in a Market Comparison Approach

et al. 2017

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“…In general, the very poor control of urban characteristics (e.g., accessibility, quality of urbanization and neighborhood effect affecting residential values as studied since Roca [19]) is a deficiency of such work and can bias the coefficients of their models. Table 1, it is also worth mentioning the work by Jensen et al [8] has found that a clear increase of the energy rating premium in Denmark as the inclusion of the EPC label became mandatory in 2010. Denmark was the first country to introduce, in 1997, an "A"-"G" energy label for buildings, well before the first EPBD came into force; nonetheless, according to such authors, only in 2011 did Danish real estate agents begin to claim that properties with higher EPC rating were the easiest properties to sell.…”

Section: The Impact Of Energy Ratings On Pricesmentioning

confidence: 94%

“…In the literature, there is extensive, yet in some case inconclusive, evidence regarding the existence of market premiums for efficient homes. According to the studies reviewed in the next section, home selling prices can vary up to 30.5% (for rating A, the most efficient one, in relation to rating G as the most inefficient) in the Danish case [8] or as little as 5% (A/G) in the case of the Irish renting market [9]. However, there is evidence suggesting that EPC labels do not play any role in price discrimination in the Oslo market [1].…”

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confidence: 99%

The Uneven Price Impact of Energy Efficiency Ratings on Housing Segments. Implications for Public Policy and Private Markets

Duarte

2019

Sustainability

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In the literature, there is extensive, although in some cases inconclusive, evidence on the impact of Energy Performance Certificates (EPC) on housing prices. Nonetheless, the question of whether such an impact is homogenous across residential segments remains highly unexplored. This paper addresses this latter issue utilizing multifamily listing data in metropolitan Barcelona. In doing so, first the entire sample is analyzed using a hedonic model. Second, the sample is split on the basis of a multivariate segmentation. Finally, separated hedonic models are specified again. The results suggest that in general, there is a modest impact of EPC ratings on listing prices, nonetheless it is not homogeneous across housing segments: (1) for the most modern apartments, with state-of-the-art features and active environmental comfort, energy ratings seem to play a null role in the formation of prices; (2) conversely, for the cheapest apartments, apartments boasting the most basic features, and apartments located in low-income areas, the "brown discount" is enormously significant, potentially depreciating the equity of those who have the least resources to carry out an energy retrofit. These results have implications for the assessment of the EPBD and its Spanish transposition, since a very well-intentioned environmental policy could have potentially harmful social repercussions in the absence of corrective measures.Commission saw the EPC scheme as "a power tool to create a demand-driven market for energy efficient buildings (p. 5) [6].Among all the real estate markets, the residential one is a special case since, due to the size of its stock, it consumes much more energy than commercial properties [7]. In the literature, there is extensive, yet in some case inconclusive, evidence regarding the existence of market premiums for efficient homes. According to the studies reviewed in the next section, home selling prices can vary up to 30.5% (for rating A, the most efficient one, in relation to rating G as the most inefficient) in the Danish case [8] or as little as 5% (A/G) in the case of the Irish renting market [9]. However, there is evidence suggesting that EPC labels do not play any role in price discrimination in the Oslo market [1]. Differences in climate and energy costs in relation to home prices and, perhaps, environmental concerns may be behind such divergences. As such, there are no reasons to believe that the impact of EPC labels is stationary across housing segments within the same city, where household budgets, personal tastes, and priorities, as well as home attributes and prices also vary in a significant manner. As a matter of fact, in the office market, there is evidence suggesting that "green labels" are contingent to characteristics of buildings in the determination of prices [10].The aim of this paper is to test whether the impact of EPC ratings on housing prices is the same in different market segments within a city. This analysis is relevant since the identification of divergent impacts may help to orien...

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“…After reading the documents, it was found that in each study one or more registries existed to determine the price premium (a register corresponds to a specification of a regression model). The existence of more than one registry depended on the following: (1) The price premium was analyzed based on the commercialization generating one model for sales and another for rental (for example, [25][26][27]); (2) the price premium of data sets from distinct years was analyzed, thereby generating a registry for each year [28][29][30][31]; (3) the models examined the price premium in distinct cities [26,32,33]; (4) the price premium of the housing was analyzed based on construction type (single or multi-family) [34][35][36]; (5) within the study, distinct types of EPC were analyzed [32,37,38]; (6) different qualification groups were analyzed [31,39]; and (7) the price premium was analyzed by comparing whether or not it had certification [40][41][42][43][44], and furthermore, the premium generated upon changing from one value to another within the EPC value scale was analyzed [25,36,45].…”

Section: Selection Criteriamentioning

confidence: 99%

Meta-Analysis of Price Premiums in Housing with Energy Performance Certificates (EPC)

et al. 2019

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Studies have found that housing with energy performance certificates have a positive premium in sales price. However, other studies have obtained negative or unexpected results. The objective of this study is to determine whether or not housing with energy performance certificates (EPC) have positive premiums in the sales price. For this purpose, a systematic review, meta-analysis, and meta-regression of prior studies were conducted in order to determine whether the existence of an EPC influences sales price. A total of 66 documents were examined, with a total of 173 sales registers. The impact of having or not having an EPC was analyzed for housing sales price premiums on a global level, as well as the premiums in Europe for each of the ABCDEFG qualification letters. The results suggest that: 1) Globally speaking, it is estimated that housing with an EPC has an overall price premium of 4.20%, on a continent level, with premiums of 5.36% being obtained in North America, 4.81% in Asia, and 2.32% in Europe; 2) in Europe, the results are not conclusive with regards to the ABCDEFG qualification, since there is no consensus as to the letter base to be used as a reference for comparisons, thereby generating small comparable samples.

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Market response to the public display of energy performance rating at property sales

Cited by 69 publications

References 5 publications

Buildings Energy Performance in a Market Comparison Approach

Buildings Energy Performance in a Market Comparison Approach

The Uneven Price Impact of Energy Efficiency Ratings on Housing Segments. Implications for Public Policy and Private Markets

Meta-Analysis of Price Premiums in Housing with Energy Performance Certificates (EPC)

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