Real Estate

Higher selling price house thanks to energy label

March 26, 2014

A favorable energy label increases the transaction price and the selling speed of privately owned homes. Studies by the TiasNimbas Business School show that the 1,700 labeled home transactions were able to find a buyer more than 100 days faster than the transactions without an energy label. The effects of a green label (A or B category) are also evident in the price.

“It appears that buyers appreciate the information provided in the energy labels. Information is essential when it comes to buying a new home, and the more information the seller can produce, the quicker a potential buyer can be convinced”, according to Prof. Dr. Dirk Brounen, professor in Real Estate Economics at TiasNimbas and research manager in this analysis.

Every quarter year, researchers of the TiasNimbas Business School study the manner in which the energy label performs on the Dutch market for owner-occupied homes. For example, it is evident from figure 1 that the market share of 15.2% shows an increasing tendency compared to the previous quarter years. These labeled homes required 106 days less to come to a successful transaction.

The outcome of this energy label was also taken into account in a price analysis of the NVM transactions in the fourth quarter. Of the 1,700 labeled transactions in the previous quarter, the homes with a green A or B energy label could count on a price premium of an average of 2.4%, even if a correction was applied for the location and quality of the home concerned. It is evident from figure 4 that this 2.4% green label premium equals the long-term average and that it comes to a premium of more than €4,500 per transaction for an average home.

 

About the Energy Label Index

This quarterly analysis is carried out by researchers of the VastgoedLAB within the TiasNimbas Business School under the supervision of Prof. Dr. Dirk Brounen. To that end, the researchers could dispose of the transaction figures of the Dutch Association of Real Estate Brokers (NVM) and the energy label information of AgentschapNL. The price effects are studied on a large scale on the basis of 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 market for privately owned homes is being continued by means of quarterly analyses.


Figure 1: marketshare labeled transactions since 2008

Figure 2: marketshare energylabels Q42013

Figure 3: effect of green energy label on selling time

Figure 4: effect of green energy label on price

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