Real Estate

Houses With Energy Label A or B Are Worth 5,000 Euros More

March 17, 2015

Houses with energy label A or B are sold for 5,000 euros more than houses with lower energy labels. This is apparent from research by the TIAS School for Business and Society among 112,127 sales of homes with energy labels since 2008. A favorable label (A and B) speeds up the sale by more than 89 days and provides a 2.6% increase in selling price. For an average house that means a higher selling price of around 5,000 euros.

Image: Nationale Beeldbank 

The energy label was introduced to the Dutch housing market seven years ago and can increase sales velocity as well as transaction prices. "Energy has been in the news a lot lately, but it is certainly not a new topic. Since January 1, 2008, already 112,127 homes with an energy label have been sold and we can see that the information taken from this label gets an increasingly prominent role in the sale. Buyers appreciate an energy-efficient home and the energy label makes it clear beforehand which homes are more economical,” says prof. Dr. Dirk Brounen, Professor of Real Estate Economics at TIAS and the research leader of this study.

Analysis of 28 quarters

Each quarter researchers from the TIAS VastgoedLAB study how the energy label performed on the Dutch housing market. The results are now known of a series of 28 quarters since 2008. Figure 1 (left) demonstrates that the current market share of 16.1% shows an increasing trend compared to previous quarters. These labeled homes took 89 days less to complete a sale.

 The result of this energy label is also factored in a price analysis of the NVM transaction.  Among the 4,434 labeled transactions from the fourth quarter of 2014, the homes with a green energy label A or B could expect a price premium of 2.6% on average, even when adjusted for location and quality. Figure 4 (right) shows that this 2.6% green label premium is equal to the longer-term average and that an average house has a premium of more than 5,000 euros per transaction.

Transaction Figures and Energy Label Information

These quarterly analyzes are conducted by researchers from the VastgoedLAB within the TIAS School for Business and Society under the direction of Prof. Dr. Dirk Brounen. The researchers have the transaction figures of the Dutch Association of Estate Agents (NVM) at their disposal and the energy label information of the Netherlands Enterprise Agency (RVO). The price effects are studied at a large scale 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 in 2011. This line of research into the effects of the energy label on the housing market will continue through quarterly analyzes.

 
Figure 2: Market share of labels in Q4 


Figure 3: Effect of green energy label at sale time           

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