Resale value: What is the selling price premium of a passive house?
A passive house offers many advantages to its owners, including the guarantee of significant energy savings and optimal interior comfort. But from a financial point of view? Does a passive house necessarily offer an added value when resold?
A property that is necessarily valued on the market
Passive buildings combine thermal comfort, indoor air quality and low energy consumption. It must meet requirements in terms of energy demand, thus ensuring optimal comfort for their occupants. It is estimated that, on average, a passive house saves between 75 and 90% of the energy used for heating and cooling, compared to a traditional house. This saving can amount to thousands of euros per year. For example, the Portuguese consumer organization Deco Proteste studied the energy needs of a 52 sq.m house in Ilhavo (Portugal) renovated according to passive principles. The organization indicates potential annual savings of over €2,500 (for a house of only 52 sq.m!). These energy savings represent a considerable added value, which is necessarily considered in the selling price of the property. This is a competitive advantage at the time of resale, in addition to the use of high quality and resistant building materials, the quality of life for the occupants and the rarity of passive buildings on the Portuguese real estate market. All of these elements ensure a higher value than for a traditional house.
In concrete terms, what is the selling price premium of a passive house?
Although experts agree that passive houses, and more generally ecological buildings, generate significant added value when resold, few studies confirm this common opinion. It is indeed difficult to announce a concrete premium in value because it depends strongly on the area concerned. Depending on the real estate market, the “green value” of the property will be more or less valued by potential buyers: is green building widespread in the country? What is the price of energy? Does the weather bring extreme temperatures? All these factors are linked to the geographical location of the property market and will influence the property price perception. But the trend towards green and sustainable construction is real. A study unveiled in 2017 by Harris Interactive indicates that “more than 9 out of 10 French people attach importance to the ecological characteristics of a house when choosing or acquiring a new home, almost at the same level as the criterion of size.” Also in France, a study conducted by the Notaires de France (Register of notaries) and unveiled at the end of 2021 demonstrates the impact of energy labels on the houses sale prices: On average, houses with an A/B energy label sold for 9% more than those with a D label, all other things being equal. The same is true in the United States, where a study conducted in North Carolina in 2017 indicates that houses with green certification sold for an average of 9.5% more than others. Estimates are also similar in England, with the example of the BedZED eco-village, located in South London and inaugurated in 2002, where homes are now selling for 5 to 10% more than conventional homes of the same surface area in the region, according to Groundsure, the British authority on environmental risks.
This premium in value also applies to the office building market. Knight Frank, a company specialized in commercial real estate worldwide, unveiled the results of its study “Green building value: do green-rated buildings add a premium to sales price?” in September 2021, which looked at offices in Melbourne, Sydney and London. Knight Frank’s research showed “an 8-18% sales price premium for green-rated buildings compared to equivalent buildings without a BREEAM or NABERS rating across these markets, depending on the level of green rating.”
In Portugal, the lack of hindsight and the still limited offer on the sustainable real estate market makes it difficult to indicate a concrete premium reselling value, but according to European neighbours and feedback from the US, it is currently around 10%.
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