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Abstract
Improving energy efficiency in buildings is a major priority of industrialized countries. By eliminating market asymmetries, Energy Performance Certificates (EPCs) is a potential policy instrument when it comes to promoting energy efficiency of real estate. Real estate agents have an important role in providing information about dwellings for sale on the market. The aim of this paper is to study whether the introduction of EPCs changes the asking price setting of real estate agents. We take advantage of the fact that the introduction of a mandatory energy certification system represents a quasi-natural experiment, where we have data on house price and asking price. Based on the analysis, both of a hedonic model and a fixed effect model, we provide evidence that the implementation of EPCs did not affect the price setting of real estate agents. This indicates that real estate agents either disregard EPCs as providers of new information or believe that the market is indifferent to this kind of information. Our results also indicate that there are large similarities between the effects of energy labels on the asking prices and the transaction prices.
Notes
1 The survey was carried out in eight European countries: Austria, France, Germany, Italy, Norway, Poland, Romania, and Spain (Pascuas et al., Citation2017).
2 The data were collected by hand, 2014 was chosen as the main year for the data collection. In 2014 the time passed since the EPC was made mandatory should be more than sufficient to see the full effect of the introduction. At the same time 2014 is close enough in time that it is easy to keep track of and check for events that could interfere with the causality of the results.
3 In Oslo, 91% of all dwellings sold in 2011 were sold through real estate agencies (Stamsø, Citation2012).
4 The seller will sometimes take part in the final discussion about the level of the asking price, but in most cases the seller trust the judgement of the real estate agent.
5 We divide the city into six districts, Frogner (that is the baseline in our model), St. Hanshaugen, Gamle Oslo, Grymerlølla and Sagene, Outer Oslo West and Outer Oslo East.
6 Here we assume that the energy status of the dwellings is constant through the two periods.