Real Estate

Energy label most popular in non-urban areas

December 6, 2013

The Energy Label is more popular in non-urban areas than in the Amsterdam-Rotterdam-Utrecht conglomeration. Studies conducted by TIAS School for Business and Society reveal that the market share of the Energy Label during the third quarter of 2013 was greatest in the provinces of Overijsel, Friesland, Noord-Brabant and Limburg (Figure 2). “It would appear that sellers in the Randstad have less difficulty selling their home. In non-urban areas, the energy label may be a distinctive quality of a home and play an important role in the sale", says Dirk Brounen, Professor of Real Estate Economics at TIAS and the research coordinator of this analysis.

Every quarter, researchers from TIAS examine how the energy label has performed within the owner-occupied property market in the Netherlands. Figure 1 depicts reveals a rising trend in the market share of 14.8% with respect to previous months. The transaction time for these labelled homes required 88 fewer days. In addition, homes sold with the 'green' label (A or B) yielded 0.8% more than those with an energy label between C and G.

Properties sold 88 days faster

The effect of this energy label is also taken into account in an analysis of the sales results of transactions in the third quarter. This indicates that the presence of an energy label helps accelerate the sale by 88 days on average. Figure 3 reveals that this effect has been reinforced over the past few months. Potential buyers are evidently more and more appreciative of the additional information communicated on the energy label. This is also apparent when only the selling price is studied. Of the 2,640 label-related transactions in the previous quarter, homes with a green A or B logo energy label could expect a price premium of 0.8% on average, even when corrected according to the location and quality of the home in question. Figure 4 also reveals that this green label premium is equal to 1.8% on average, or around $4,000 per transaction.

This quarterly analysis is carried out by researchers from the Real Estate LAB within TIAS, headed by Professor Dirk Brounen. They have access to the transaction data of the Dutch Association of Real Estate Brokers (NVM) and energy label information from the Dutch governmental organisation AgentschapNL. The price effects are examined extensively using a validated research model as described in "On the Economics of Energy Labels in the Housing Market" by Brounen and Kok and published in the Journal of Environmental Economics and Management 2011. This line of research into the effects of the energy label on the owner-occupied housing market in the Netherlands is continued via quarterly analyses.

Figure 1: market share of label-related transactions since 2008
Figure 1: market share of label-related transactions since 2008

Figure 2: market share of energy labels Q3 2013 

Figure 2: market share of energy labels Q3 2013

Figure 3: impact of green energy label on time required to sell
Figure 3: impact of green energy label on time required to sell

Figure 4: impact of green energy label on selling price
Figure 4: impact of green energy label on selling price

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Quarterly Report Q3 2013, Dirk Brounen (2013) - in Dutch

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