The economic value of sustainability. Real estate market and energy performance of homes

The energy transition and decarbonisation require a major transformation of the housing stock. Responsible for around 40% of fossil fuel consumption and 30% of CO2 emissions, the built heritage must be upgraded in terms of energy performance. The issue is particularly sensitive for Italy, where seven out of ten homes are in the worst energy classes according to the classification introduced by the EU. The research aimed at investigating whether, and to what extent, energy-efficient homes command a premium price on the market compared to less efficient homes. The study focused on three medium-sized cities in northern Italy and developed three hedonic models based on more than 900 ask prices. The results confirm the stratification of the market in terms of energy efficiency levels. Estimates converge in absolute and relative terms between different cities. Particularly significant is the average gap found between properties in the highest efficiency class (Class A) and those in the lowest efficiency class (Class G), with values of around thirty percentage points, while the gap is around fourteen percentage points if we consider properties in Class D compared to Class G. The conclusions are in line with European studies on the subject, but show a trend towards an increasing gap between the market values of properties with different energy performance classes