Green energy label increases value of homes

(12 May '09)

Green energy label increases value of homes
Dutch house buyers are prepared to pay more for homes that come with a “green energy label,” which indicates that the property is energy-efficient. This is shown by new research out today. The study has been conducted by the Rotterdam School of Management, Erasmus University and Maastricht University. An analysis of over 100,000 housing transactions in the Netherlands over 2008 has brought to light that, on average, buyers pay 3.4 percent more for homes with a green energy label than for those without. This premium being paid is unrelated to the qualities of the houses or their locations and is being achieved across the whole owner-occupied housing spectrum (although some types of houses score a bit better than others).

“It appears that a green energy label – indicative of a good or excellent energy-performance – makes a favourable impression on buyers in the Dutch housing market,” explains Prof.dr. Dirk Brounen of RSM. The biggest effect can be seen with apartments (flats), which fetch an extra 4.7 percent thanks to their “green stamp of approval.” On average in the whole privately owned housing sector, homes awarded with a green label (A, B of C) fetch an additional 3.4 percent, in comparison to houses granted only a red label (D or worse). Brounen explains, “The considerations being made for, say, an apartment differ from those for a converted farmhouse. When people are thinking of buying particular types of houses, such as farmhouses, their focus is more on how it looks and feels than on how energy efficient it is. However, if we’re talking about more standardized houses such as apartments, a green energy label has a bigger impact on the house price.”

Labels gain in popularity
The study also shows that, in the first three quarters of 2008, energy certification was requested and obtained for more than 17 percent of all transactions in the owner-occupied housing market. Getting an energy label is particularly popular in the southern provinces of Limburg and Zeeland. “The first results indicate that the energy label is often used as a special selling point, particularly in difficult regional markets and slow-moving housing segments,” says fellow research dr. Nils Kok of Maastricht University. “A green label raises the selling price of a house and shortens its for-sale period. Maybe the positive experiences gained will increase the take-up of energy certification among house sellers.”

On behalf of Dutch Ministry of Housing, Spatial Planning and the Environment, SenterNovem (government agency promoting sustainable development and innovation) has recently issued the millionth energy label in the Dutch property market. The press release is available here and the publication and summary is available here.