Energy label increases home sales in the Netherlands



Nov 22, 2011|Research | comments -

Homes with an energy label sell more quickly, generally speaking, than those without. In addition, buyers are willing to pay an average of 6,000 euros more for homes with a ‘green’ label. These are the findings of a large-scale study in the Netherlands by researchers at Tilburg University and Maastricht University working on behalf of the Dutch Ministry of the Interior.

Image of solar panels on a home
Image "solar power" by benefit of hindsight (CC BY-NC-ND)

Homes with an energy label sell more quickly, generally speaking, than those without. In addition, buyers are willing to pay an average of 6,000 euros more for homes with a ‘green’ label. These are the findings of the large-scale study 'The energy label on the residential property market'  by researchers at Tilburg University and Maastricht University working on behalf of the Dutch Ministry of the Interior. The study focuses on the Dutch market for residential property.

The energy label is becoming an increasingly significant factor in the housing market. After an uncertain start in 2008, the introduction of a revised version of the energy label in January 2010 led to a growth in its popularity. Since January 2008, more than 50,000 homes with an energy label have been sold in the Netherlands, which is fifteen per cent of the total market. However, because of the information the label contains, it appears that homes with a label sell 24 days more quickly on average than those without.

The effect of the energy labels is also reflected in the sale price: there is evidence of a green ‘bonus’ among the 50,000 transactions mentioned above, with buyers paying an average of three per cent (6,000 euros) more for homes with a green label (labels A, B and C) than a red one (labels D to G), for otherwise comparable homes. “We have noticed that buyers put a certain value on the information. Forewarned is forearmed, and the importance of the energy bill is great enough for consumers to include it in their evaluation,” states Dirk Brounen, Professor of Real Estate at Tilburg University.

Buying a home that does not have an energy label means having to guess at the level of future gas and electricity bills. “For a typical home, a gas bill can vary from 43 euros for one with an economical A-label to 174 euros for a similar home in the energy-wasting G category,” explains Dr Nils Kok of Maastricht University. “The label gives potential buyers an advance signal, something which accelerates the purchase process by an average of 24 days.”

Notes

The energy label shows the energy efficiency of homes, by means of a rating (from A to G). It has been compulsory in the Netherlands for residential property for sale since January 2008.

Reference and citing

This article was originally posted as “Energielabel stimuleert verkoop woning” (in English: “The energy label on the residential property market”) in Dutch on Econtrack.

This article may be reproduced according to our terms of use with attribution (and link, if online) to http://fsinsight.org. To be cited as: “Energy label increases home sales in the Netherlands”, Dirk Brounen and Nils Kok, fsinsight.org, November 22, 2011.