RICS shows the impact of energy labels in the housing market (EU)

Energy performance certificates not only provide citizens with accurate information on their homes' energy savings, but they also have a clear impact on homes value, showing a green premium of 2.8% in the Dutch housing market, according to the latest research commissioned by RICS.

With this study, RICS provides one of the first evidences to demonstrate that homebuyers are willing to pay more for homes that have been labeled as more energy efficient in the European residential market. Findings are based on data from the Netherlands, one of the first adopters of a certification scheme under the EU Energy Performance in Buildings Directive.

Key findings from the research show:

• There is a premium associated with properties that demonstrate high levels of energy efficiency, with a 2.8% higher transaction price for properties with an A, B, or C certificate.

• The label price increment varies with the outcome of the label and mostly reflects the financial benefits from lower energy expenses in more energy-efficient buildings.

• The initial results show that adoption rate was approximately 25% after the scheme was introduced in the Netherlands, but fell soon after that.

• The propensity to certify a property increases in high density neighborhoods, where average monthly income is low, and where voting for 'green' political parties is more common

• There also seems to be a higher uptake of certification in areas of weak market demand, suggesting that energy performance certificates are regarded as an aid to marketing and selling a property.

Michaela Holl, Policy officer at the European Commission, DG-Energy said: "The European Commission welcomes this study as the first empirical work carried out on the residential sector in Europe and the first one that could demonstrate empirically the positive impact of the energy performance certificate.

If property owners can expect a green premium on their transaction price and value of their property (and a premium of 2.8 % is actually not negligible in this respect), it can be a real incentive to invest into an energy efficiency refurbishment. The European Commission hopes that similar evaluations can be carried out soon also in other EU countries to broaden and consolidate the evidence."

According to Dirk Brounen, Professor of Finance and Real Estate at the Erasmus University, in the Netherlands: "Providing feedback to private consumers with respect to their energy consumption is an effective 'nudge' to improve energy efficiency. Empirical evidence regarding the implementation and valuation of energy labels is limited and the lack of information creates uncertainty among private consumers."

Source: RICS

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