# Energy Performance Certificates and Its Capitalization in Housing Values in Sweden

## Abstract

**:**

## 1. Introduction

## 2. Methodology

^{2}, Akaike Information Criterion (AIC), and Bayesian information criterion (BIC).

## 3. Empirical Analysis

#### Data

^{2}) is around 75–87 percent, which can be considered to be excellent and comparable to other hedonic price studies. The difference between the default model and the models controlling for outlier and selection bias is substantial. Estimated coefficients concerning living area, number of rooms, and age are of reasonable magnitude, and they are all statistically significant. For example, one extra room is expected to increase the price by around 3 percent, and a year-older, single-family house will decrease the price by 0.16 percent. The estimates are also robust across specifications of the hedonic model. The EPC variable is estimated to be at its lowest at 3.36 percent (coefficient 0.033) in the Matched model 2 compared to 5.27 percent (coefficient 0.0514) in the Default model. That is equivalent to almost SEK 100,000 (Euro 9278) and approximately SEK 200,000 (Euro 18,556), respectively. Hence, failure to consider outliers and potential selection problems can have significant consequences and policy implications.

## 4. Discussion and Conclusions

## Funding

## Acknowledgments

## Conflicts of Interest

## References

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**Table 1.**Descriptive statistics in the treatment and control group. Mean and standard deviation (within brackets).

Treatment | Control | Total | |
---|---|---|---|

Price (SEK) | 3,257,628 | 3,133,500 | 3,162,818 |

(2,088,475) | (2,104,361) | (2,101,268) | |

Living area (Square meter) | 140 | 130 | 132 |

(43) | (44) | (44) | |

Number of rooms | 5.50 | 5.15 | 5.23 |

(1.42) | (1.49) | (1.48) | |

Age(years) | 45 | 52 | 51 |

(28) | (27) | (28) | |

Plot size (square meter) | 2358 | 2199 | 2237 |

(20,008) | (16,743) | (17,569) | |

Year-month | 2015-06 | 2016-06 | 2015-22 |

(126) | (128) | (128) | |

Latitude | 58.10 | 59.10 | 58.64 |

(2.42) | (2.42) | (2.23) | |

Longitude | 15.44 | 15.23 | 15.28 |

(2.70) | (2.56) | (2.59) | |

Number of observations | 19,550 | 63,224 | 82,774 |

**Table 2.**Balancing property, matched samples using nearest neighbor and nearest neighbor within the radius. Average and standard deviation (within brackets).

Nearest Neighbor | Within Radius | |||
---|---|---|---|---|

Treated | Control | Treated | Control | |

Age (years) | 45.94 | 49.17 | 51.85 | 51.20 |

(27.71) | (27.60) | (24.42) | (26.92) | |

Living area (square meters) | 139.84 | 134.51 | 132.60 | 131.43 |

(42.42) | (41.16) | (36.72) | (37.50) | |

Plot size (square meters) | 2271.13 | 2185.66 | 2216.00 | 2104.97 |

(19,562) | (15,091) | (18,353) | (15,982) | |

Number of rooms | 5.50 | 5.32 | 5.32 | 5.23 |

(1.42) | (1.44) | (1.30) | (1.34) | |

Year-month | 2015-12 | 2015-12 | 2015-12 | 2015-12 |

(137.09) | (133.27) | (128.29) | (129.80) | |

Latitude | 59.11 | 58.77 | 58.54 | 58.54 |

(2.42) | (2.24) | (2.06) | (2.07) | |

Longitude | 15.43 | 15.33 | 15.16 | 15.21 |

(2.70) | (2.64) | (2.57) | (2.59) | |

Price (SEK) | 3,241,247 | 3,245,903 | 3,158,499 | 3,217,498 |

(2,047,234) | (2,128,380) | (1,998,327) | (2,111,472) | |

Number of observations | 18,774 | 10,814 | 9312 | 7658 |

Default | Multivariate (1) | Multivariate (2) | Matched (1) | Matched (2) | Stratified | |
---|---|---|---|---|---|---|

EPC | 0.0514 | 0.0368 | 0.0410 | 0.0331 | 0.0356 | 0.0371 |

(17.66) | (16.72) | (17.19) | (10.29) | (8.76) | (16.91) | |

Ln(Living area) | 0.5925 | 0.5502 | 0.5603 | 0.5763 | 0.5445 | 0.5282 |

(108.75) | (116.06) | (76.83) | (76.81) | (54.50) | (96.42) | |

Number of rooms | 0.0359 | 0.0243 | 0.0431 | 0.0398 | 0.0444 | 0.0303 |

(32.41) | (22.62) | (23.50) | (26.99) | (21.69) | (22.72) | |

Plot size | 0.0001 | 0.0001 | 0.0001 | 0.0001 | 0.0001 | 0.0001 |

(24.53 | (26.46) | (7.48) | (16.40) | (10.45) | (26.80) | |

Ln(Age) | −0.0998 | −0.0404 | −0.0801 | −0.0879 | −0.0817 | −0.0472 |

(−56.05) | (−12.43) | (−46.58) | (−45.20) | (−21.52) | (−12.35) | |

Propensity score | - | 0.5042 | - | - | - | - |

16.27 | ||||||

Constant | 55.4015 | 58.0831 | 71.8171 | 73.3430 | 76.7408 | 76.7566 |

(47.32) | (46.70) | (45.02) | (43.37) | (31.95) | (73.77) | |

Fixed strata effect | No | No | No | No | No | Yes |

Sample weights | No | No | Yes | No | No | No |

Fixed county and municipality effects | Yes | Yes | Yes | Yes | Yes | Yes |

Fixed time effects | Yes | Yes | Yes | Yes | Yes | Yes |

R^{2} adjusted | 0.7507 | 0.8636 | 0.8653 | 0.8553 | 0.8489 | 0.8581 |

Shapiro-Francia (p-value) | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0001 | - |

Breusch-Pagan (p-value) | 0.0000 | 0.0000 | - | 0.0000 | 0.0000 | - |

VIF (Treatment) | 1.06 | 1.13 | 1.12 | 1.08 | 1.05 | - |

No. of observations | 99,877 | 80,260 | 80,260 | 29,588 | 16,970 | 80,260 |

Percentile | Coefficient | t-Value | Impact (%) |
---|---|---|---|

0.9 | 0.0269 | 7.03 | 2.73 |

0.8 | 0.0277 | 7.42 | 2.81 |

0.7 | 0.0284 | 7.81 | 2.88 |

0.6 | 0.0290 | 8.15 | 2.94 |

0.5 | 0.0270 | 7.31 | 2.74 |

0.4 | 0.0266 | 7.10 | 2.70 |

0.3 | 0.0277 | 7.20 | 2.81 |

0.2 | 0.0285 | 7.25 | 2.89 |

0.1 | 0.0259 | 5.37 | 2.62 |

**Table 5.**Spatial error model, spatial autoregressive model, and spatial Durbin model (direct effects). Matched sample. Maximum likelihood estimates.

SEM | SAR | SDM | ||||
---|---|---|---|---|---|---|

W1 | W2 | W1 | W2 | W1 | W2 | |

EPC | 0.0342 | 0.0342 | 0.0337 | 0.0340 | 0.0340 | 0.0343 |

(5.43) | (5.43) | (5.35) | (5.39) | (5.39) | (5.43) | |

Ln(Age) | −0.0844 | −0.0844 | −0.0837 | −0.0837 | −0.0847 | −0.0849 |

(−14.33) | (−14.34) | (−14.23) | (−14.22) | (−14.32) | (−14.35) | |

Ln(Living area) | 0.5460 | 0.5460 | 0.5474 | 0.5473 | 0.5470 | 0.5472 |

(35.08) | (35.08) | (35.18) | (35.18) | (35.15) | (35.16) | |

No. of rooms | 0.0453 | 0.0453 | 0.0453 | 0.0453 | 0.0451 | 0.0452 |

(14.33) | (14.33) | (14.32) | (14.31) | (14.26) | (14.27) | |

Plot size | 0.0001 | 0.0001 | 0.0001 | 0.0001 | 0.0001 | 0.0001 |

(9.41) | (9.41) | (9.37) | (9.36) | (9.22) | (9.07) | |

Constant | 81.3160 | 81.3747 | 81.45453 | 81.5450 | 81.3110 | 81.4391 |

(20.81) | (24.69 | (23.06) | (27.49) | (19.70) | (23.43) | |

Rho | −0.0009 | −0.0030 | ||||

(−0.24) | (−0.79) | |||||

Lamda | 0.7491 | 0.7087 | ||||

(6.26) | (6.57) | |||||

Fixed time effect | Yes | Yes | Yes | Yes | Yes | Yes |

Fixed county effect | Yes | Yes | Yes | Yes | Yes | Yes |

Fixed municipality effect | Yes | Yes | Yes | Yes | Yes | Yes |

Wald test (p-value) | 0.0000 | 0.0000 | 0.8134 | 0.4271 | 0.0000 | 0.0000 |

Pseudo R2 | 0.8290 | 0.8290 | 0.8290 | 0.8428 | 0.8294 | 0.8293 |

Interaction | South | North | Stratified | |
---|---|---|---|---|

EPC | 0.0316 | 0.0261 | 0.0693 | 0.0347 |

(9.69) | (7.91) | (7.23) | (15.37) | |

EPC-north | 0.0208 | - | - | 0.0315 |

(2.78) | (4.71) | |||

Ln(Living area) | 0.5758 | 0.5664 | 0.6117 | 0.5277 |

(76.72) | (72.44) | (28.91) | (96.32) | |

Number of rooms | 0.0398 | 0.0401 | 0.0366 | 0.03028 |

(27.01) | (26.29) | (8.63) | (22.73) | |

Plot size | 0.0001 | 0.0001 | 0.0001 | 0.0001 |

(10.45) | (18.70) | (6.81) | (26.76) | |

Ln(Age) | −0.0879 | −0.0856 | −0.1105 | −0.0474 |

(−45.23) | (−43.67) | (−16.62) | (−12.40) | |

Constant | 75.4048 | 76.5737 | 65.6259 | 76.7954 |

(43.41) | (38.37) | (16.74) | (73.81) | |

Fixed strata effect | No | No | No | Yes |

Fixed county and municipality effects | Yes | Yes | Yes | Yes |

Fixed time effects | Yes | Yes | Yes | Yes |

R^{2} adjusted | 0.8553 | 0.8502 | 0.7878 | 0.8582 |

No. of observations | 29,588 | 23,995 | 5,633 | 80,253 |

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**MDPI and ACS Style**

Wilhelmsson, M. Energy Performance Certificates and Its Capitalization in Housing Values in Sweden. *Sustainability* **2019**, *11*, 6101.
https://doi.org/10.3390/su11216101

**AMA Style**

Wilhelmsson M. Energy Performance Certificates and Its Capitalization in Housing Values in Sweden. *Sustainability*. 2019; 11(21):6101.
https://doi.org/10.3390/su11216101

**Chicago/Turabian Style**

Wilhelmsson, Mats. 2019. "Energy Performance Certificates and Its Capitalization in Housing Values in Sweden" *Sustainability* 11, no. 21: 6101.
https://doi.org/10.3390/su11216101