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The Effects of Energy Efficiency Renovation of Residential Buildings on the Housing Market: A Study from Lithuania

Author

Listed:
  • EglÄ— JakuÄ ionytÄ—

    (Bank of Lithuania)

  • Swapnil Singh

    (Bank of Lithuania)

Abstract

This study examines the impact of large-scale energy efficiency renovations on apartment prices in Lithuania by combining administrative data on transactions with information on renovation projects. We find that the increase in apartment prices typically falls short of covering renovation costs, with the estimated gap reaching approximately 25%. This gap – the net price effect – is particularly pronounced outside the three largest municipalities, largely due to regional differences in apartment price levels rather than renovation costs. We propose a search-andmatching housing market model to explain these patterns. In this model, higher market thickness increases the net price effect, and may also help explain the lower renovation activity observed in thicker markets.

Suggested Citation

  • EglÄ— JakuÄ ionytÄ— & Swapnil Singh, 2025. "The Effects of Energy Efficiency Renovation of Residential Buildings on the Housing Market: A Study from Lithuania," Bank of Lithuania Working Paper Series 135, Bank of Lithuania.
    • Handle: RePEc:lie:wpaper:135
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    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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