Analysis of the level of understanding of energy performance certificate classes, perceived confidence and impact on preferences and residential value

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The Centre for Land Valuation Policy (CPSV UPC)has explored the impact of energy performance certificate (EPC) classes on the Spanish residential market as part of the EnerValor project. Through a statistical analysis of big data, interviews, surveys and the application of techniques for studying residential preferences, the project explored the understanding and perceived confidence in the EPC scheme by potential buyers and main agents in the residential market, the effect of energy classes on value, the relevance of energy efficiency for residential choice and the willingness to pay for improvements in EPC class.

 

The results suggest that, in general, the population does not understand what EPC classes measure or the underlying architectural attributes. Some estate agents also confuse the purpose of the energy classes and consider that they are similar to indicators of comfort or residential quality. In contrast, when people are clearly informed in understandable units about energy efficiency, the underlying architectural attributes and the financial and environmental impacts, they say that they are willing to pay more for efficient dwellings or at least the same amount as represented by the energy saving, and they give more importance to efficiency than other attributes. According to the professionals, the banalisation of EPC classes is widespread, as they are considered to be a mere procedure. Some malpractice is even indicated in the creation of the classes, as well as failure to include them in real estate advertising. In addition, it is indicated that their low cost leads to a brief energy evaluation, in some cases even without visiting the dwelling.

In turn, the econometric models suggest a positive correlation between EPC classes and residential prices, although this correlation is moderate in comparison with other EU countries. The incidence is uneven: it seems that it is higher in cities with few highly efficient dwellings and inverted in cities where advertising cannot be rigorously monitored. That is, there is a greater increase in prices. It has also been observed that the economic impact is very high in more inefficient dwellings in lower-income neighbourhoods. In contrast, in new dwellings with attributes of architectural quality such as facilities, good qualities. etc., it has no impact. This suggests that the EPC classes are not fully understood. In the absence of quality attributes, EPC classes play an unsuitable role in real estate differentiation. Indirectly, this environmental policy is widening the gap between dwellings with extreme income levels, as those who are most in need do not have real opportunities for energy efficiency in their dwellings.

The project was funded by the Ministry of Economy and Competitiveness and the European Regional Development Funds (ERDF). Spanish National Programme of Research, Development and Innovation Oriented to the Challenges of Society, 2015 call.


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