# RECORD 53f863bd54970307af93c0ba10a947b3b65b890a # TITLE: The impact of Energy Performance Certificate level on house listing prices. First evidence from Italian real estate # YEAR: 2015.0 VENUE: Aestimum DOI: 10.13128/aestimum-15459 # AUTHORS: E. Fregonara; D. Rolando; P. Semeraro; M. Vella # PAGES: 21 CANDIDATE TABLE PAGES (1-based): [12] # ABSTRACT: The recent dispositions related to the energy performance of buildings, launched by the European Directives 2002/91/EC and 2010/31/EU, turned attention to the Energy Performance Certificate (EPC). The aim of this study is to investigate the economic effects of the recent Italian statutory provisions related to energy performance of buildings on listing behaviour. With this aim an hedonic regression analysis is performed, in order to measure the impact of EPC level on listing prices. The study, based on a set of more than 500 housing property asset collected in 2012 from real estate advertisements websites, is focused on the Turin real estate market as a case study. Furthermore this paper contributes to the early limited literature on implication of the impact of EPC level on Italian housing market, representing one of the first systematic evidence about the energy certifications in the housing listing prices.  ===== PAGE 1 (score 8, numeric-paren 0, table-words 0, var-words 8) ===== AESTIMUM 65, Dicembre 2014: 143-163 © Firenze University Press www.fupress.com/ceset DOI: 10.13128/Aestimum-15459 Elena Fregonara Diana Rolando Patrizia Semeraro Marta Vella Dipartimento Architettura e Design, Politecnico di Torino E-mail: elena.fregonara@polito.it, diana.rolando@polito.it, patrizia.semeraro@polito.it, martavella@gmail.com Key words: Sustainable Real Estate, Energy Efficient Buildings, Energy Performance Certificate (EPC), Hedonic Model Parole chiave: Sostenibilità e mercato immobiliare, Classi di prestazione energetica, Determinanti prezzi di offerta JEL: C31, R30, R31 The impact of Energy Performance Certificate level on house listing prices. First evidence from Italian real estate The recent dispositions related to the energy performance of buildings, launched by the European Directives 2002/91/ EC and 2010/31/EU, turned attention to the Energy Perfor- mance Certificate (EPC). The aim of this study is to investigate the economic effects of the recent Italian statutory provisions related to energy performance of buildings on listing behaviour. With this aim an hedonic regression analysis is performed, in order to measure the impact of EPC level on listing prices. The study, based on a set of more than 500 housing property asset col- lected in 2012 from real estate advertisements websites, is focused on the Turin real estate market as a case study. Fur- thermore this paper contributes to the early limited literature on implication of the impact of EPC level on Italian housing market, representing one of the first systematic evidence about the energy certifications in the housing listing prices.  1. Introduction The impact of energy performance of buildings on house prices is related to re- cent European Directives. Particularly, the European Performance of Buildings Di- rective 2002/91/EC introduced the Energy Performance Certificate (EPC), to measure energy performance of buildings. According to Article 7 of the Directive 2002/91/ EC “Member States shall ensure that, when buildings are constructed, sold or rent- ed out, an energy performance certificate is made available to the owner or by the owner to the prospective buyer or tenant, as the case might be. The validity of the certificate shall not exceed 10 years”. Furthermore, in order to reinforce the European regulation in housing market, the European Directive 2010/31/EU (EPBD Recast) re- quires mandatory energy performance certificate for all buildings within the Euro- pean Union. The Article 12 defines that “Members States shall require [...] the energy performance indicator of the energy performance certificate of the building or the building unit, as applicable, is stated in the advertisements in commercial media.” According to the Directives 2002/91/EC and 2010/31/EU “the energy perfor- mance of buildings should be calculated on the basis of a methodology, which may be differentiated at national and regional level, that includes, in addition to thermal characteristics, other factors that play an increasingly important role such as heating and air-conditioning installations, application of energy from renew- able sources, passive heating and cooling elements, shading, indoor air-quality, ad- equate natural light and design of the building […]”. ===== PAGE 12 (score 32, numeric-paren 3, table-words 13, var-words 3) ===== 154 E. Fregonara, D. Rolando, P. Semeraro, M. Vella all the characteristics considered have a significant impact on listing price, in that they are considered by agents important factors in selling a house. Also notice that the omitted Microzone is a central one, explaining the fact that most of the coef- ficients are negative. Since the EPC is not associated with quality of the building, apartment condi- tion and Microzone, we perform the regression including the EPC level, to meas- ure the contribution of EPC to explain the model price variability. Table 7 provide the results of the regression performed including EPC level in the set of explana- tory variables. The explanatory power of the model is Adjusted R2=0.76, showing that to include the EPC levels does not improve the fit of the model (the Adjusted R2 increase is only 0.01). Furthermore, if we consider each EPC level coefficient we notice that only level F is significant. By considering that level G is not reliable since it includes property whose level has not been assigned the level F is the low- Table 4. Chi-square test results. EPC level Location (Microzone) X-squared = 10.30, df = 5, p-value = 0.07 Buildings quality X-squared = 4.17, df = 5, p-value = 0.53 Apartment condition X-squared = 2.52, df = 5, p-value = 0.77 Source: authors’ own work. Table 5. The explanatory power of the EPC level. Residuals: Min 1Q Median 3Q Max -0.946274 -0.300495 -0.003115 0.291018 1.229920   Estimate Std. Error t value Pr(>|t|)   (Intercept) 80.41 0.80 70.22 < 2e-16 *** B Omitted C -0.12 0.89 -0.98 0.33   D -0.20 0.85 -1.60 0.10   E -0.27 0.86 -2.17 0.03 * F -0.40 0.87 -3.23 0.00 ** G -0.27 0.82 -2.32 0.02 * Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1 Residual standard error: 0.41 on 497 degrees of freedom Multiple R-squared: 0.04, Adjusted R-squared: 0.03 F-statistic: 4.16 on 5 and 497 DF, p-value: 0.00 Source: authors’ own work. ===== PAGE 13 (score 9, numeric-paren 5, table-words 1, var-words 2) ===== The impact of Energy Performance Certificate level on house listing prices 155 Table 6. Hedonic regression results (Model 1, excluding the EPC level in the set of explanatory variables). Residuals Min 1Q Median 3Q Max -0.84666 -0.11911 0.00676 0.12933 0.53547   Estimate Std. Error t value Pr(>|t|)   (Intercept) 785.08 0.06 133.75 < 2e-16 *** Microzone 1 0.19 0.12 1.66 0.1 . Microzone 2 Omitted Microzone 3 0.13 0.08 1.55 0.12   Microzone 4 0.07 0.08 0.58 0.4   Microzone 5 -0.02 0.07 -0.22 0.82   Microzone 6 0.26 0.11 2.32 0.02 * Microzone 7 -0.14 0.06 -2.22 0.03 * Microzone 8 0.01 0.08 0.11 0.87   Microzone 9 -0.11 0.08 -1.38 0.17   Microzone 10 -0.22 0.08 -2.87 0 ** Microzone 11 -0.32 0.07 -4.92 1.17E-06 *** Microzone 12 -0.12 0.07 -1.65 0.1 . Microzone 14 0.04 0.07 0.42 0.55   Microzone 15 -0.08 0.07 -1.13 0.26   Microzone 16 0.4 0.12 3.45 0 *** Microzone 17 -0.1 0.1 -1.06 0.29   Microzone 18 -0.27 0.08 -2.73 0 ** Microzone 19 -0.45 0.07 -6.47 2.18E-10 *** Microzone 20 -0.51 0.07 -7.08 4.54E-12 *** Microzone 21 -0.8 0.06 -13.37 < 2e-16 *** Microzone 22 -0.19 0.08 -2.43 0.01 * Microzone 23 0.15 0.07 2.13 0.03 * Microzone 24 -0.06 0.06 -1.04 0.3   Microzone 25 -0.17 0.09 -1.99 0.05 * Microzone 26 -0.45 0.07 -6.74 4.25E-11 *** Microzone 27 -0.41 0.08 -4.87 1.44E-06 *** Microzone 28 -0.54 0.08 -6.64 8.01E-11 *** Microzone 29 -0.36 0.06 -6.38 3.78E-10 *** Microzone 30 -0.49 0.07 -6.66 6.82E-11 ***