Urban Disparities in Energy Performance Premium Prices: Towards an Unjust Transition?

Abstract

In recent years, numerous studies have explored how energy and environmental performance impact property values. Superior energy efficiency is the basis for value disparities in real estate markets. However, measurements of these variations vary significantly. This research aims to investigate the relationship between market size and vitality and market value differences. This has significant implications for the nature of the energy transition, potentially determining fairness or inequality. The study considers the real estate market in six Italian cities: three metropolitan (Milan, Turin, and Florence) and three medium-sized cities (Padua, Mestre, and Bergamo). The sample includes 2935 properties. In metropolitan cities, hedonic pricing models confirm the relevance of energy performance in market value formation, highlighting a potential depreciation in property values by up to 30% between properties belonging to the highest energy class (A) compared to the lowest (G), and 14% between class D and G. Such premium gaps are halved in medium-sized cities. Conclusions foresee a scenario of socially and economically unjust transition that must be considered in policies aimed at improving the energy efficiency of existing buildings, with a specific concern for the nature and characteristics of the real estate markets involved.