Abstract
Energy performance certificates (EPCs) were introduced to give property buyers better information about the energy efficiency of dwellings and provide incentives to make energy-efficient investments. Previous studies on the effect of EPCs on property value have yielded divergent results, with some studies finding that energy labels affect property values, but others finding that energy labels have little or no effect. The present paper takes the analysis one step further. Using data on energy prices in combination with transaction data from Oslo, we conclude that not only the energy label, but also the energy performance of dwellings in general, has little to no effect on transaction prices. This result is in line with the inferences of several survey studies, which indicate that when people buy a dwelling, they pay considerably less attention to its energy performance compared with other factors, such as the location, neighborhood, size, garden, and the number of bedrooms.
Highlights
In July 2010, Norway implemented the energy labeling system for houses and dwellings, and energy performance certification became fully mandatory
Our results indicate that the impact of the expected energy costs on transaction prices is more moderate after the implementation of the Energy performance certificates (EPCs)
If we take an apartment of 40 m2 with the energy label C, the expected price premium is Norwegian kroner (NOK) 682 per square meter, compared with a similar apartment with the energy label D
Summary
In July 2010, Norway implemented the energy labeling system for houses and dwellings, and energy performance certification became fully mandatory. All houses and dwellings for sale are required to have an energy performance certificate (EPC). The motivation for using EPCs is to provide information to buyers and tenants about the energy performance of buildings. Reliable information on energy consumption is supposed to improve the functioning of real estate markets and create incentives to invest in energy efficiency. The information provided to potential buyers by the EPC is intended to stimulate energy efficiency investments because the consequent improved energy performance will potentially increase the sale prices and rents of buildings [1]. The EPC reflects the expected energy consumption of a building, which enables buyers to account for the expected current and future energy costs when assessing their willingness to pay for a residence
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