The economic premium of housing certificates aimed at promoting long-life property and transaction of existing housing in Japan

Abstract

This study investigates the economic premium of multiple housing certificates to promote the long-life property and existing housing transactions in Japan. These certificates are different from the widely investigated green or environmental-related certificates. Employing transaction data for detached houses in the Tokyo metropolitan area, hedonic regression analyses reveal the following relationships between certificates and transaction prices. First, long-life quality houses designed to last longer than ordinary houses result in a positive premium on transaction prices. Second, the mortgage tax credit-related certificates for transactions of existing houses, such as those meeting earthquake resilience standards or defect insurance inspection standards, result in a positive premium on transaction prices, especially for older properties. Third, the economical premiums from other certificates may be neutral if benefits for buyers are limited or the certificate has a complementary relationship with another. Considering that the positive premium of certificates means that buyers highly demand such properties, our results imply that the promotion of long-life property and existing housing transactions through financial incentives is shifting the nature of active new construction and rapid demolition of properties to a more sustainable society with longer economic life of building.