Global homebuyers pay more for green

Evidence gathered by RICS has shown that homebuyers in some parts of the world are willing to pay a premium for green-labelled homes.

Research into the housing market in Tokyo found eco-labelled homes were classed as a luxury product, offered primarily to higher income households able to pay a premium for owning and occupying a green-badged home. The study, which looked at 50,000 housing transactions in the condominium market including information on eco-certification, found green property price premiums increased in line with the household income of buyers, from 4% to nearly 8%.

The study also looked at energy performance certificates (EPCs) and housing attributes for several thousand flats in the metropolitan area of Helsinki in Finland. Here it identified a significant price premium for apartments with high EPC ratings of A and B. The report says this can be due to what it calls the “clientele effect”, where a small group of environmentally aware buyers aims to buy the highest rated homes. The Helsinki evidence suggests higher energy efficiency levels can be financially rewarded even in a market with high building and energy efficiency standards. Beyond the top tier of energy ratings, however, findings were less conclusive.

The report, Measuring ‘green value’: An international perspective, also includes a study on the US office market, looking at operating expenses, rents and building characteristics in six large office markets. This also finds added green value, created not only by the cost saving benefit of charges related to the lease, but also by a premium related to additional benefits of energy efficiency.

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