 Estimating the impact of energy efficiency on housing prices in Germany: Does regional disparity matter?Lisa Taruttis and Christoph Weber Energy Economics, 2022, vol. 105, issue C Abstract: The German government is aiming for a climate-neutral building stock before 2050 to meet the defined goals of the Climate Action Plan 2050. Increasing the building stock's energy efficiency is therefore a high priority, and investments by private homeowners will greatly influence this, as around 46.5% of German homes are owner-occupied. To identify the possible monetary benefits of investments in energy retrofits, we investigate whether energy efficiency is reflected in the property values of German single-family homes. Therefore, we examine potential heterogeneous effects across regions. With 422,242 individual observations on a 1 km2-grid level from 2014 to 2018, this study adds to the extant literature by 1) examining the energy efficiency effect on housing values for the entire country and specifically investigating regional disparities in this context, and 2) estimating an energy efficiency value-to-cost ratio to compare housing values' increase with initial investment costs and future energy cost savings. Applying hedonic analysis, we find a positive relationship between energy efficiency and asking prices. If energy efficiency increases by 100 kWh/m2a, prices increase by 6.9% on average. We also find evidence for regional disparities. The effects are significantly weaker in large cities than in other urban areas, whereas the impact in rural regions is much stronger. According to this, housing shortage and higher purchasing power per capita were identified as drivers for low energy efficiency premiums. Finally, there is evidence that about 98% of future energy cost savings are already reflected in a higher housing value under myopic expectations regarding future energy prices. Keywords: Energy efficiency; Residential buildings; Regional disparity; German housing market; Hedonic analysis; Housing value (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:105:y:2022:i:c:s0140988321005958 DOI: 10.1016/j.eneco.2021.105750 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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