The price premium of residential energy performance certificates: A scoping review of the European literature
Yanmei Ou, Nick Bailey, David Philip McArthur, Qunshan Zhao
Abstract
• Our review is the first to apply a transparent, systematic searching and screening process to the European literature. • More energy-efficient homes are sold or rented at a price premium, with each EPC band adding about 1%-3% to the price. • There is no evidence that the price premium increased over time, nor that it differs between northern and southern Europe. • The public availability of EPC data has a major influence on the generation of published research. Achieving a reduction in energy demand and a decarbonisation of the energy supply is crucial to reaching overall goals for Net Zero by 2050, underscoring the importance of energy efficiency improvements in the housing sector. While Energy Performance Certificates (EPCs) in the EU are important tools to encourage investment in energy efficiency through market signals, their effectiveness remains in question. This review aims to summarise the European academic literature in English on the price premium of residential EPCs. The objectives are to summarise the scope and scale of the research, the methodological approaches and limitations, and to synthesise the estimated price premium. Adopting a scoping review approach with digital databases and artificial intelligence tools for literature searching, 68 studies and 111 models are included covering studies to May 2024. Findings show that studies are mainly concentrated in those parts of Europe where EPC data are openly available, and that the publication pace increased in recent years. With hedonic models being the dominant approach, major limitations found in this field include property-level data availability and omitted variable bias (OVB), rendering difficulties in isolating the impact of energy efficiency. Results synthesis shows a positive price premium for energy-efficient homes, as well as some variation between submarkets. It suggests future research needs to leverage new forms of data and methods to address the OVB, as well as exploring submarkets and studies on wider housing market impacts. To realise a sustainable transition, policymakers should support property-level data infrastructure, strengthen the implementation and harmonisation of the EPC system, and tailor energy retrofit policies for different submarkets.