Mandatory Disclosure and Housing Market Dynamics

This study investigates the impact of mandatory energy performance certification (EPC) disclosure on housing market dynamics in France. Building on a phased implementation of disclosure policies since 2006, the 2021 regulation introduced legally binding EPC visibility in advertisements alongside significant penalties for non-compliance. Using a (i) difference-in-discontinuity framework that exploits cross-border policy variations between France and Belgium and (ii) an event study design exploiting the heterogeneous effect of the regulation, the study accounts for spatial and temporal variations in policy adoption and identifies the causal effects of this policy on property prices. The analysis reveals three key insights. First, energy-inefficient properties (EPC ratings F or G) faced price declines up to -9 percentage points (pp) under mandatory disclosure, signaling a market penalty for inefficiency. Second, efficient properties experienced modest price gains, with houses showing a +3pp increase. Third, the regulation surprisingly fostered strategic nondisclosure, particularly in apartment market, where missing EPC ratings garnered a +14pp price premium four years after enactment. These findings highlight the heterogeneity of market responses across property types and locations. The study concludes by discussing the social welfare implications of mandatory disclosure, including improved affordability for certain buyers, risks of eviction due to price increases, and potential misreporting behaviors. By advancing the understanding of energy efficiency’s role in housing markets, this research offers actionable insights for policymakers seeking to balance climate goals with equitable market outcomes.