Energy label gives house sales a boost
September 8, 2014 | 2 min read
A favorable energy label steps up the sale of Dutch homes by over 100 days. Energy labels may speed up sales in a recovering housing market as well. Favorable labels are repaid in the form of a price premium, according to a study by TIAS School for Business and Society (the business school of Tilburg University and TU/e).
Image: © Nationale Beeldbank
More than 13% of the 21,632 homes sold in the second quarter were sold with an energy label. This amounts to almost 3000 homes. The houses with a green label (A and B labels) could count on a price premium of, on average, over 4,000 Euro.
“Buyers on the housing market have come to appreciate the information provided in energy labels. Information is very important when purchasing a new home. The more the seller can show the buyer, the sooner the buyer can be convinced,” says Prof. dr. Dirk Brounen, professor of Real Estate economics within TIAS and the research leader in this analysis.
Stable level market share
Every quarter year, researchers at TIAS study the manner in which the energy label has performed on the Dutch market for owner-occupied homes. For example, it is evident from figure 1 that the energy label has reached a stable level in the market for owner-occupied homes with a market share of 13.8%. Labeled homes required 102 days less to come to a successful transaction.
A favorable energy label also has positive effects on the sales price, as is evident from a price analysis of the NVM-transactions in the second quarter of 2014. Of the 2988 labeled transactions, the homes that had a green A or B energy label could count on a price premium of an average of 0.8%. This also applies after a correction with respect to the location and quality of the home concerned.
This quarterly analysis is carried out by researchers of the VastgoedLAB within the TIAS 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 Netherlands Enterprise Agency (RVO). The price effects are studied on a large scale on the basis of a validated research model as described in the paper “On the economics of energy labels in the housing market” by Brounen and Kok that was 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: market share labeled transactions since 2008
Figure 2: market share energy labels Q2 2014
Figure 3: effect of green energy label on sales time
Figure 4: effect of green energy label on price