On the use of Hedonic Regression Models to Measure the Effect of Energy Efficiency on Residential Property Transaction Prices: Evidence for Portugal and Selected Data Issues

Abstract

Using a unique dataset containing information of around 256 thousand residential property sales, this paper discloses a clear sales premium for most energy-efficient dwellings, which is more pronounced for apartments (13%) than for houses (5 to 6%). Cross-country comparisons support the finding that energy efficiency price premiums are higher in the Portuguese residential market than in central and northern European markets. Results emphasize the relevance of data issues in hedonic regression models. They illustrate how the use of appraisal prices, explanatory variables with measurement errors, and the omission of variables associated with the quality of the properties, may seriously bias energy efficiency partial effect estimates. These findings provide valuable information not only to policymakers, but also to researchers interested in this area.

https://inhabitat.com/energy-efficient-villa-in-portugal-uses-locally-sourced-cork-for-insulation/

https://rem.rc.iseg.ulisboa.pt/wps/pdf/REM_WP_064_2019.pdf
by Rui Evangelista 1, Esmeralda A. Ramalho ad Joao Anrade E. Silva 3

1. Instituto Nacional de Estatística, rui.evangelista@ine.pt

2. Universidade de Lisboa, Instituto Superior de Economia e Gestão & REM - CEMAPRE,

eramalho@iseg.ulisboa.pt

3. Universidade de Lisboa, Instituto Superior de Economia e Gestão & REM - CEMAPRE,

joaoas@iseg.ulisboa.pt

REM – Research in Economics and Mathematics
REM Working Paper 064-2019; Lisbon, Portugal; January 2019