Energistyrelsen

Do homes with better energy efficiency ratings have higher house prices? (Econometric approach)

Energy savings in buildings is a topic of great political interest, not only in Denmark, but in the entire EU. One important reason being that energy savings in buildings is a relatively inexpensive way to obtain CO2 reductions.

However, compared to expectations the rate of undertaking these energy renovations is rather low in the household sector. Different factors can explain this reluctance including uncertainty about future energy prices, inconvenience related to the renovation and high up-front costs.

Another important reason might be the uncertainty about whether the obtained energy savings from an energy renovation will translate into a higher sales price at a future sale. As higher energy efficiency ratings reduce household energy costs, one would expect these economic savings to be reflected in the sales price.

In this analysis, we examine exactly this by addressing the question: To which extent do homes with better energy efficiency ratings give rise to higher house prices?

The results are based on extensive econometric studies including 365,000 house sales observations as well as an innovative experimental approach that tests for effects under different behavioral circumstances.

This is the analysis containing the econometric approach. Compared to the summary report this background report explains the method, results and conclusions in more detail

Download