How Does the Presentation of Energy Performance Affect the Price of Houses? A Case Study of Detached Houses in Stockholm, Sweden

Mats Wilhelmsson

No 23/2, Working Paper Series from Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance

Abstract: Our study aims to analyse whether the capitalisation of a property's energy performance is affected by how it is presented. Since 2002, an EU directive has been in place mandating the introduction of an energy performance certificate (EPC) when selling detached houses. This directive was implemented in Sweden in 2009. We analyse how EPC capitalised on housing prices during 2012-2018 for detached houses in Stockholm. This has been done before, but our contribution is to analyse both the effect of energy rating or labelling (A-G) and energy consumption (kWh/m²). How energy performance is communicated or displayed to potential buyers conveys that the format, style, and content of energy performance information may influence how buyers perceive its value and impact on the property's market price. We have information on energy rating, consumption, or both for selected properties. This allows us to test the hypothesis that how energy performance is presented affects pricing. We have also tested whether information affects different age cohorts differently. The results indicate that how energy performance is presented and visualised is important and that information about rating and consumption might be considered as a substitute for each other. It is also clear that the capitalisation effect differs depending on the age of the building.

Keywords: energy rating; energy performance; labelling; capitalisation; housing prices (search for similar items in EconPapers)
JEL-codes: M31 Q48 R30 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2023-04-17
New Economics Papers: this item is included in nep-ene, nep-eur and nep-ure
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