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Energy Performance certificates and its capitalization in housing values in Sweden

Mats Wilhelmsson ()

No 19/3, Working Paper Series from Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance

Abstract: The impact on energy performance certificates on housing prices has been investigated extensively in recent years. However, the results from these investigations are mixed. We add to the literature by more specifically controlling for potential biases by employing a combination of alternative approaches to estimate the causal relationship between house prices and energy performance certificates. We use a traditional hedonic modeling approach, but we are additionally using propensity score methods to be able to compare treated houses with a control group. We also investigate the impact of outliers, spatial dependency, and parameter heterogeneity of our estimates. Moreover, we use quantile regression technique to test the hypothesis that the capitalization effect varies across the price distribution. Our results indicate there is an upward bias if we are not controlling for outlier and selection bias. Regardless of the propensity score method approach, the results are lower than a model (around 3 percent capitalization compared to 6 percent). However, our results do not support that the impact of energy performance certificates varies in the price distribution. Consequently, the certificates are not differently capitalized in the high-end housing price segment. Finally, our results do not support the hypothesis that the energy performance certificate should be more capitalized into house prices in the northern and colder parts of Sweden than in the south of Sweden.

Keywords: energy performance certificates; climate; hedonic price equation; selection bias; propensity score method (search for similar items in EconPapers)
JEL-codes: Q40 Q50 R30 R38 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2019-10-18
New Economics Papers: this item is included in nep-ene, nep-env and nep-ure
References: View references in EconPapers View complete reference list from CitEc
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Handle: RePEc:hhs:kthrec:2019_003