The price of energy efficiency in the Spanish housing market

The housing sector is a substantial consumer of energy, and therefore a focus for energy savings efforts. The Energy Performance Certificate (EPC) is the main EU policy to improve the energy performance of buildings. Following the implementation of the EPC Directive into Spanish law, from June 2013, all properties offered for sale or rented out in Spain are required to have an EPC. Given that this is a recently introduced regulation, unlike other European housing markets, the Spanish one lacks market data on energy efficiency (EE) labels and their impact on housing price. In order to overcome this gap, we determine the EE ratings of a sample of 1,507 homes across Spain on the basis of information collected previously through household surveys. This information allowed us to answer the question of whether or not, and to what extent, Spanish housing markets capitalise the value of EE. We apply the hedonic-price technique and observe that more energy efficient dwellings (meaning higher EE rating) have a price?premium between 5.4% and 9.8% compared to those with the same characteristics but lower EE level.