Measuring the price premium of energy efficiency: A two-step analysis in the Italian housing market
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Decarbonizing the building sector by means of the smart interconnection of increasingly efficient buildings is one of the European Union's goals in order to meet its climate and energy targets and a milestone in delivering future positive-energy cities. Energy performance certificates today, and smart readiness indicators tomorrow should positively influence consumers’ choices and orient them towards an appreciation of sustainable buildings. Although energy performance certificates are now required by law in the EU Member States, it remains to be seen whether and how local real estate markets react to them. To fill this gap, we analyzed a cross-sectional housing dataset in the Italian city of Bolzano, which serves as a noteworthy case study due to its compact urban form and the environmental awareness of its local society. We first tested a hedonic price model, and then its spatial specification. Considering the certified energy efficiency performance and the characteristics of the location among the explanatory variables, we found a price premium in excess of 6% on moving from the worst (“G”) to the best (“A”) energy efficiency class, all other characteristics being equal. The presence of a spillover effect to nearby properties can also be framed as an additional co-benefit of retrofitting.