IDEAS home Printed from https://ideas.repec.org/p/esr/wpaper/rb2014-1-3.html
   My bibliography  Save this paper

The Value of Domestic Building Energy Efficiency – Evidence from Ireland

Author

Listed:
  • Hyland, Marie
  • Lyons, Ronan C.
  • Lyons, Seán

Abstract

Following the transposition of the EU Energy Performance of Buildings Directive into Irish law, all properties offered for sale or to let in Ireland are obliged to have an energy efficiency rating. This paper analyses the effect of energy efficiency ratings on the sale and rental prices of properties in the Republic of Ireland. Using the Heckman selection technique we model the decision to advertise the energy efficiency rating of a property and the effect of energy efficiency ratings on property values. Our results show that energy efficiency has a positive effect on both the sales and rental prices of properties, and that the effect is significantly stronger in the sales segment of the property market. We also analyse the effect of energy efficiency across different market conditions and we find that the effect of the energy rating is stronger where market conditions are worse.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Hyland, Marie & Lyons, Ronan C. & Lyons, Seán, 2014. "The Value of Domestic Building Energy Efficiency – Evidence from Ireland," Papers RB2014/1/3, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:rb2014/1/3
    as

    Download full text from publisher

    File URL: https://www.esri.ie/pubs/RB20140103.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chihiro Shimizu & Kiyohiko G Nishimura & Tsutomu Watanabe1, 2012. "House prices from magazines, realtors,and the Land Registry," BIS Papers chapters, in: Bank for International Settlements (ed.), Property markets and financial stability, volume 64, pages 29-38, Bank for International Settlements.
    2. Piet Eichholtz & Nils Kok & John M. Quigley, 2013. "The Economics of Green Building," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 50-63, March.
    3. Bank for International Settlements, 2012. "Property markets and financial stability," BIS Papers, Bank for International Settlements, number 64.
    4. Franz Fuerst & Patrick McAllister, 2011. "Green Noise or Green Value? Measuring the Effects of Environmental Certification on Office Values," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(1), pages 45-69, March.
    5. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    6. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    7. Pat McAllister & Franz Fuerst & Buki Ekeowa, 2011. "The Impact of Energy Performance Certificates on the Rental and Capital Values of Commercial Property," ERES eres2011_89, European Real Estate Society (ERES).
    8. Piet Eichholtz & Nils Kok & John M. Quigley, 2010. "Doing Well by Doing Good? Green Office Buildings," American Economic Review, American Economic Association, vol. 100(5), pages 2492-2509, December.
    9. Miranowski, John & Dinan, T., 1989. "Estimating the Implicit Price of Energy Efficiency Improvement in the Residential Housing Market: A Hedonic Approach," Staff General Research Papers Archive 10698, Iowa State University, Department of Economics.
    10. Koopmans, Carl C. & te Velde, Dirk Willem, 2001. "Bridging the energy efficiency gap: using bottom-up information in a top-down energy demand model," Energy Economics, Elsevier, vol. 23(1), pages 57-75, January.
    11. Fuerst, Franz & McAllister, Patrick, 2011. "The impact of Energy Performance Certificates on the rental and capital values of commercial property assets," Energy Policy, Elsevier, vol. 39(10), pages 6608-6614, October.
    12. Alexander Reichardt & Franz Fuerst & Nico B. Rottke & Joachim Zietz, 2012. "Sustainable Building Certification and the Rent Premium: A Panel Data Approach," Journal of Real Estate Research, American Real Estate Society, vol. 34(1), pages 99-126.
    13. Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 3-28, Winter.
    14. Amecke, Hermann, 2012. "The impact of energy performance certificates: A survey of German home owners," Energy Policy, Elsevier, vol. 46(C), pages 4-14.
    15. Zheng, Siqi & Wu, Jing & Kahn, Matthew E. & Deng, Yongheng, 2012. "The nascent market for “green” real estate in Beijing," European Economic Review, Elsevier, vol. 56(5), pages 974-984.
    16. Banfi, Silvia & Farsi, Mehdi & Filippini, Massimo & Jakob, Martin, 2008. "Willingness to pay for energy-saving measures in residential buildings," Energy Economics, Elsevier, vol. 30(2), pages 503-516, March.
    17. Dinan, Terry M. & Miranowski, John A., 1989. "Estimating the implicit price of energy efficiency improvements in the residential housing market: A hedonic approach," Journal of Urban Economics, Elsevier, vol. 25(1), pages 52-67, January.
    18. Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy-efficiency gap What does it mean?," Energy Policy, Elsevier, vol. 22(10), pages 804-810, October.
    19. repec:arz:wpaper:eres2011-89 is not listed on IDEAS
    20. Brounen, Dirk & Kok, Nils, 2011. "On the economics of energy labels in the housing market," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 166-179, September.
    21. Gilmer, Robert W., 1989. "Energy labels and economic search : An example from the residential real estate market," Energy Economics, Elsevier, vol. 11(3), pages 213-218, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ramos, A. & Gago, A. & Labandeira, X. & Linares, P., 2015. "The role of information for energy efficiency in the residential sector," Energy Economics, Elsevier, vol. 52(S1), pages 17-29.
    2. Copiello, Sergio, 2017. "Building energy efficiency: A research branch made of paradoxes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1064-1076.
    3. de Ayala, Amaia & Galarraga, Ibon & Spadaro, Joseph V., 2016. "The price of energy efficiency in the Spanish housing market," Energy Policy, Elsevier, vol. 94(C), pages 16-24.
    4. Ana Ramos & Alicia Pérez-Alonso & Susana Silva, 2015. "Valuing Energy Performance Certificates in the Portuguese Residential," Working Papers 02-2015, Economics for Energy.
    5. Liang Wong, Ing & Krüger, Eduardo, 2017. "Comparing energy efficiency labelling systems in the EU and Brazil: Implications, challenges, barriers and opportunities," Energy Policy, Elsevier, vol. 109(C), pages 310-323.
    6. Chegut, Andrea & Eichholtz, Piet & Holtermans, Rogier, 2016. "Energy efficiency and economic value in affordable housing," Energy Policy, Elsevier, vol. 97(C), pages 39-49.
    7. Konstantin A Kholodilin & Andreas Mense & Claus Michelsen, 2017. "The market value of energy efficiency in buildings and the mode of tenure," Urban Studies, Urban Studies Journal Limited, vol. 54(14), pages 3218-3238, November.
    8. Fuerst, Franz & Shimizu, Chihiro, 2016. "Green luxury goods? The economics of eco-labels in the Japanese housing market," Journal of the Japanese and International Economies, Elsevier, vol. 39(C), pages 108-122.
    9. Jiro Yoshida & Ayako Sugiura, 2015. "The Effects of Multiple Green Factors on Condominium Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 50(3), pages 412-437, April.
    10. Rocco Curto & Elena Fregonara, 2019. "Monitoring and Analysis of the Real Estate Market in a Social Perspective: Results from the Turin’s (Italy) Experience," Sustainability, MDPI, vol. 11(11), pages 1-22, June.
    11. Giraudet, Louis-Gaëtan, 2020. "Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector," Energy Economics, Elsevier, vol. 87(C).
    12. Andrea Chegut & Piet Eichholtz & Rogier Holtermans & Juan Palacios, 2020. "Energy Efficiency Information and Valuation Practices in Rental Housing," The Journal of Real Estate Finance and Economics, Springer, vol. 60(1), pages 181-204, February.
    13. Khazal, Aras & Sønstebø, Ole Jakob, 2020. "Valuation of energy performance certificates in the rental market – Professionals vs. nonprofessionals," Energy Policy, Elsevier, vol. 147(C).
    14. Andreas Mense, 2018. "The Value of Energy Efficiency and the Role of Expected Heating Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 671-701, November.
    15. Fuerst, Franz & McAllister, Patrick & Nanda, Anupam & Wyatt, Peter, 2015. "Does energy efficiency matter to home-buyers? An investigation of EPC ratings and transaction prices in England," Energy Economics, Elsevier, vol. 48(C), pages 145-156.
    16. Ronan C. Lyons & Sean Lyons & Sarah Stanley, 2015. "The Price Effect of Building Energy Ratings in the Dublin Residential Market," Trinity Economics Papers tep0415, Trinity College Dublin, Department of Economics.
    17. Lu Zhang & Lennart Stangenberg & Sjors van Wickeren, 2020. "The information value of energy labels: Evidence from the Dutch residential housing market," CPB Discussion Paper 413.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    18. Lu Zhang & Lennart Stangenberg & Sjors van Wickeren, 2020. "The information value of energy labels: Evidence from the Dutch residential housing market," CPB Discussion Paper 413, CPB Netherlands Bureau for Economic Policy Analysis.
    19. Ankamah-Yeboah, Isaac & Rehdanz, Katrin, 2014. "Explaining the variation in the value of building energy efficiency certificates: A quantitative meta-analysis," Kiel Working Papers 1949, Kiel Institute for the World Economy (IfW Kiel).
    20. Sylvain Chareyron, 2024. "The Valuation of Energy Efficiency Labels in the French Housing Market," TEPP Working Paper 2024-05, TEPP.

    More about this item

    Keywords

    energy efficiency/Ireland/value;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:esr:wpaper:rb2014/1/3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Burns (email available below). General contact details of provider: https://edirc.repec.org/data/esriiie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.