Higher energy rating can boost the selling price of house by 10%
But while there is a price premium associated with energy-efficient properties in both the sale and rental markets, homeowners place a greater value on a good BER rating than renters.
The research by the ESRI — entitled The Value of Domestic Building Energy Efficiency – Evidence from Ireland — involved analysing the impact of a BER rating on the sale or rent of 36,000 properties listed on property website daft.ie between Jan 2008 to Mar 2012.
The researchers found that a good energy rating has a stronger effect when sales conditions are worse. Each improvement along the BER scale was associated with a 2% increase in the sales price compared to a 1.5% increase when market conditions were not as bad.
The authors of the report said that looking at the estimated impacts of the BER certificates “we find that, relative to D-rated properties, otherwise comparable A-rated properties receive a sales price premium of 9.3%”.
In fact, for each improvement along the 15-point BER scale, the report’s authors noted an increased sales price of 1.3% and an increased rental rate of 0.5%. The report also found the price premium associated with increased energy efficiency was greater in the rural market (2.3%) compared to the urban market (1.2%).
Ronan Lyons, assistant professor of economics at Trinity College Dublin (TCD) and one of the report’s authors, said this was probably because selling conditions were “a lot tougher” in rural areas and the BER rating was “one area to make a property stand out”.
As to why homeowners placed greater value than renters on energy efficient homes, Mr Lyons said the property holds its value better which is something the owner benefits from rather than the renter.
Despite the added value of a good energy rating, the researchers found that compliance with mandatory BER labelling appeared to be low.
