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Energy performance ratings and house prices in Wales: an empirical study

Fuerst, F., McAllister, P., Nanda, A. and Wyatt, P., (2015) Energy performance ratings and house prices in Wales: an empirical study. Working Papers in Real Estate & Planning. 05/15. Working Paper. University of Reading, Reading. pp40.

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This paper investigates the price effect of EPC ratings on the residential dwelling prices in Wales. It examines the capitalisation of energy efficiency ratings into house prices using two approaches. The first adopts a cross-sectional framework to investigate the effect of EPC band (and EPC rating) on a large sample of dwelling transactions. The second approach is based on a repeat-sales methodology to examine the impact of EPC band and rating on house price appreciation. The results show that, controlling for other price influencing dwelling characteristics, EPC band does affect house prices. This observed influence of EPC on price may not be a result of energy performance alone; the effect may be due to non-energy related benefits associated with certain types, specifications and ages of dwellings or there may be unobserved quality differences unrelated to energy performance such as better quality fittings and materials. An analysis of the private rental segment reveals that, in contrast to the general market, low-EPC rated properties were not traded at a significant discount, suggesting different implicit prices of potential energy savings for landlords and owner-occupiers.

Item Type:Report (Working Paper)
Divisions:Henley Business School > Real Estate and Planning
ID Code:40895
Publisher:University of Reading
Publisher Statement:The copyright of each paper remain with the author. If you wish to quote from or cite any paper please contact the appropriate author. In some cases a more recent version of the paper may have been published elsewhere.


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