Do homebuyers value energy efficiency? Evidence from an information shock

Abstract

We study the housing market response to a nationwide policy that mandated the provision of energy efficiency information with all marketing material at the time of listing. Using the near universe of housing sales in England and Wales, we match in the energy efficiency status of the property from Energy Performance Certificates at the time of sale. We provide causal evidence of households willingness to pay for a higher energy rated property, documenting a 1-3% premium to a higher energy efficiency rating at the national level, and a 3-6% premium in the London market. We consider two potential responses of homeowners to the policy – short-run gaming of the ratings, and longer-run property improvements – finding no support for the former, but some evidence of the latter.

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ORCID for Brendon Mcconnell: orcid.org/0000-0001-6029-9479

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