Green signalling effects in the market for energy-efficient residential buildings

Franz Fuerst, Elias Oikarinen and Oskari Harjunen

Applied Energy, 2016, vol. 180, issue C, 560-571

Abstract: Empirical evidence from recent studies suggests that the price premium on energy-efficient buildings is potentially higher than the pure capitalisation of energy savings but the empirical evidence on the size of the non-savings components is scant. This study aims to fill this research gap by investigating whether the mandatory energy efficiency ratings for residential properties imply benefits that go beyond energy savings. Using a sample of several thousand apartment transactions from Helsinki, Finland, we first test if higher ratings were significantly associated with higher prices. In addition to a large number of property and neighbourhood characteristics, this dataset contains information on building-level energy usage which allows us to distinguish between the cost savings effect of energy consumption and the value of more intangible factors associated with the energy label. The hedonic model yields a statistically significant 3.3% price premium for apartments in the top three energy-efficiency categories and 1.5% when a set of detailed neighbourhood characteristics are included. When maintenance costs containing energy usage costs are added, a robust and significant price premium of 1.3% persists whereas no differentiation is found for the medium and lower rating categories. These findings may be indicative of energy-efficient buildings having signalling value – and therefore an additional incentive to invest in such buildings – for ‘green’ consumers. However, a favourable energy rating did not appear to speed up the sales process in the analysed market.

Keywords: Housing; Signalling value; Energy efficiency; Energy performance rating; Hedonic pricing; Time on market (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0306261916310170
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:180:y:2016:i:c:p:560-571

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/bibliographic
http://www.elsevier. ... 405891/bibliographic

DOI: 10.1016/j.apenergy.2016.07.076

Access Statistics for this article

Applied Energy is currently edited by J. Yan

More articles in Applied Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().