Real Estate

Growing appreciation for green housing label

July 16, 2013

The energy label's popularity within the owner-occupied housing market increased during the first quarter of 2013. Studies conducted by TIAS School for Business and Society show that 1,550 homes with an energy label were sold during the first months of 2013. On average, these were sold 100 days faster than homes without an energy label. In addition, homes sold with the 'green' label (A or B) yielded 6.2% more than those with an energy label between C and G.

Image: © Nationale Beeldbank

Every quarter, researchers from TIAS study how the energy label has performed within the owner-occupied housing market in the Netherlands. Figure 1 indicates that the 1,550 label-related transactions are equal to 14.9% of the total number of housing transactions from this quarter. This market share of 14.9% represents an increase with respect to previous quarters and is not evenly distributed across the country. Figure 2 clearly shows that the energy label is most popular in non-urban areas and less popular in the large urban areas of the Amsterdam-Rotterdam-Utrecht conglomeration.

The effect of this energy label is also taken into account in an analysis of the sales results of transactions in Q1 2013. This indicates that the presence of an energy label helps accelerate the sale by 100 days on average. Figure 3 reveals that this effect has been reinforced over the past few months. Potential buyers are increasingly appreciative of the additional information communicated on the energy label. This is also apparent when only the selling price is studied. Of the 1,550 label-related transactions from the previous quarter, homes with a green A or B label could expect a price premium of 6.2% on average, even with a correction according to the location and quality of the home in question. Since the introduction of the label, the popularity of this green label premium has been growing. Figure 4 shows that this 6.2% price premium is a record since the introduction of the label in January 2008.

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.

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Quarterly Report Q1 2013, Dirk Brounen (2013) - in Dutch

http://www.youtube.com/watch?v=NSyoTFPXJi8
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