Energy Efficiency in Real Estate: Stabilizing Property Declines and Balancing the Market

A recent study by real estate experts has revealed that properties with poor energy performance, such as uninsulated apartments or parents’ houses, have experienced a significant decline in value over the past year. However, there is some good news as a new study by Sören Gröbel from the real estate consulting firm Jones Lang LaSalle (JLL) suggests that this trend has at least come to a halt, with one exception.

For older, unrenovated houses, the costs of energy-saving renovations are now being deducted almost one-to-one from the purchase price, resulting in a stabilization of price declines. This is primarily due to stabilized construction costs and even decreases in some trades, as well as stabilized financing costs following a rise in interest rates.

The study also reveals that the price difference between properties with top energy efficiency ratings and the worst ratings has decreased slightly, indicating an increased importance of energy efficiency in purchasing decisions. With rising electricity and gas prices, buyers are becoming more aware of the need to invest in energy-efficient properties to save money on utility bills in the long run.

However, selling unrenovated properties remains a challenge, especially in rural areas where owners may have to compromise more on the price compared to those in cities. The gap between old and new properties is expected to widen further, making it difficult for buyers to offset the costs of expensive energy-saving renovations in rural areas.

Despite these challenges, there is hope for improvement in the real estate market as efforts to improve energy efficiency in properties could lead to a more balanced market in the future. The federal government’s new law on heating replacement has caused uncertainty in the market but it will eventually lead to more efficient heating systems which will be beneficial for both buyers and sellers.