How heterogeneous is the impact of energy efficiency on dwelling prices? Evidence from the application of the unconditional quantile hedonic model to the Portuguese residential market

Abstract

This paper studies the impact of energy efficiency on the unconditional distribution of residential property prices in Portugal. Using a dataset of more than 256,000 residential property sales from 2009 to 2013, a period that covers an economic depression, unconditional quantile regression analysis reveals that the responsiveness to energy efficiency improvements is different not only as we move from low- to high-priced residential units but also between apartments and houses. While apartments show a downward trend in the magnitude of energy efficiency coefficient estimates, the opposite occurs for houses. This last property type exhibits clear price discounts at the lowest quantiles of the price distribution, something that is not observable through conditional mean and quantile regression analysis. Our results suggest the existence of a different level of responsiveness to energy efficiency improvements in the Lisbon region when compared to the rest of the country and that the impact of the Energy Performance Certificate label increases throughout time across all price quantiles. As a by-product of this paper, an unconditional quantile price index shows how the impact of the crisis was not the same across different market segments, with more severe price decreases for low- than high-priced properties.