Impact and reliability of EPCs in the real estate market

Pascuas, Ramón Pascual; Paoletti, Giulia; Lollini, Roberto

doi:10.1016/j.egypro.2017.11.127

Cited by 31 publications

(17 citation statements)

References 4 publications

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“…His conclusions indicate that the effectiveness of EPCs is limited, due to the unhelpfulness in understanding the financial implications of energy efficiency; therefore, energy efficiency is only a minor purchasing criterion. Compatible evidence can be found in the study of Pascual et al [28] based on surveys gathered from real estate agents in eight EU countries. According to their results, EPC ratings exert a negligible impact on housing prices.…”

Section: Brief Literature Review and Issues Around The Epbd Spanish Imentioning

confidence: 91%

The Relevance of EPC Labels in the Spanish Residential Market: The Perspective of Real Estate Agents

et al. 2020

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Assessment regarding the impact of Energy Performance Certificates (EPC) on the residential market is largely inconclusive; while the majority of hedonic analyses have found EPC ratings to be correlated with prices, opinion-based research has found a negligible impact on prices and other marketing variables. Using the opinion of qualified real estate agents, this paper explores whether, in Spain, EPC labels play any role in housing marketing, as well as the policy changes required to foster efficient dwellings. The results reveal a large misunderstanding of the EPC labels, since they are seen as a global home-quality indicator, while their impact on residential marketing is quite poor. Apparently, both supply and demand place a small interest in energy performance, although it is slightly larger for sellers/buyers in relation to lenders/tenants. In any case, EPC labels are far from blurring the energy information asymmetry, since most of the buyers/tenants are informed of the EPC rating after having selected their home. Overall, the EPC scheme has a poor reputation exacerbated by inaccuracies, unintelligible units to express the financial and environmental implications of energy efficiency, and an apparent weak supervision. These findings stress the need to improve the scheme; in doing so, realtors suggest the need for some companion policies.

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Section: Brief Literature Review and Issues Around The Epbd Spanish Imentioning

confidence: 91%

The Relevance of EPC Labels in the Spanish Residential Market: The Perspective of Real Estate Agents

et al. 2020

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“…Their findings suggest that Sustainability 2019, 11, 372 5 of 23 facilities' aesthetics are the main driver of rents. Compatible evidence can be found in the study of Pascual et al [22] based on surveys applied to real estate agents in eight countries. According to their results, EPC ratings exert a negligible impact on housing prices, this conclusion is especially valid in the case of Spain where only 15% of the surveyed agents confirmed the existence of a premium for efficient flats.…”

Section: The Impact Of Energy Ratings On Pricesmentioning

confidence: 93%

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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“…A review of the literature on the application of HPM for the EPC valuation in European countries have been performed [38]. The cases analyzed refer to residential and commercial property markets [15,39,40]. One of the first European studies investigating the effect of the EPC on property prices dates back to 2012 and it was proposed by Kok and Jennen [7] in the Netherlands.…”

Section: Investigating the Epc Impacts Through Hpmsmentioning

confidence: 99%

EPC Green Premium in Two Different European Climate Zones: A Comparative Study between Barcelona and Turin

et al. 2019

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Energy performance certificates (EPCs) are important tools aimed at improving buildings’ energy performance. They play a central role in the context of the Energy Performance of Buildings Directive (EPBD) which asks member states (MS) to take the necessary measures to establish a complete certification system. In this study, an application of the hedonic price method (HPM) assessing the effect of energy labels derived from the EPC on real estate market value is presented. The estimation methodology was applied to two European cities characterized by different climate conditions. The analysis was based on two datasets of listing prices referring to multi-family residential markets in Turin (Italy) and Barcelona (Spain). Four models for each dataset were applied to capture the marginal price of green attributes, but also to control for the spatial autocorrelation among values. The findings showed how the EPC has been applied in the two countries and how it has influenced the real estate market. Turin’s buyers pay more attention to the EPC label, while in Barcelona, they value much more single characteristics, such as air conditioning and a swimming pool, considered popular attributes among contemporary buildings in this climate zone. From the results, it is possible to deduce that the implementation of the EPC schemes is still irregular in EU countries and must be strengthened through a standardized rating model.

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Impact and reliability of EPCs in the real estate market

Cited by 31 publications

References 4 publications

The Relevance of EPC Labels in the Spanish Residential Market: The Perspective of Real Estate Agents

The Relevance of EPC Labels in the Spanish Residential Market: The Perspective of Real Estate Agents

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

EPC Green Premium in Two Different European Climate Zones: A Comparative Study between Barcelona and Turin

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