The price discount for properties with high energy consumption continues to grow. In particular, the uncertainty surrounding the heating law and the fear of rising costs are putting pressure on the market for energy-inefficient houses. According to current data from the real estate specialist Jones Lang LaSalle (JLL), the price difference between buildings with the best energy efficiency and those with the worst efficiency class has recently increased (time: 08.09.24).
Real estate prices plummet: 27% discount for houses with poor energy performance
Table of Contents
- 1 Real estate prices plummet: 27% discount for houses with poor energy performance
- 2 Renovation costs burden buyers
- 3 High losses for older properties for retirement provision
- 4 Here are some People Also Ask (PAA) related questions for the title **”The Rising Importance of Energy Efficiency in Real Estate: A Growing Price Gap Between Efficient and Inefficient Properties”**:
- 5 Here’s a list of People Also Ask (PAA) questions related to the title **”The Rising Importance of Energy Efficiency in Real Estate: A Growing Price Gap Between Efficient and Inefficient Properties”**:
Table of Contents
- 1 Real estate prices plummet: 27% discount for houses with poor energy performance
- 2 Renovation costs burden buyers
- 3 High losses for older properties for retirement provision
- 4 Here are some People Also Ask (PAA) related questions for the title **”The Rising Importance of Energy Efficiency in Real Estate: A Growing Price Gap Between Efficient and Inefficient Properties”**:
In the second quarter, the average price difference between apartment buildings in classes A/A+ and the most energy-intensive houses in classes G/H was around 27 percent. In the first quarter, this difference was still around 25 percent. The average price reduction across all energy efficiency classes rose from 16.7 percent to 20 percent. Only the influence of energy-relevant features was taken into account.
Energy efficiency of real estate: Price differences between the best and worst efficiency classes continue to increase
Renovation costs burden buyers
A key factor in the price decline for poorly insulated properties is the high renovation costs. Buyers of houses that have not been renovated to improve energy efficiency are often faced with significant maintenance costs. Although these have fallen slightly in recent months, they are still well above the general inflation rate and the development of construction costs, as JLL analyzes.
Since the second half of 2021, when energy prices rose significantly, the energy efficiency of real estate has become massively more important. This issue has become the focus of buyers and investors, particularly due to the war in Ukraine and the resulting increases in energy prices. The Heating Act further increases these uncertainties, which puts pressure on the prices of existing buildings.
High losses for older properties for retirement provision
Homeowners who have bought older properties as a retirement plan or built them themselves are particularly affected. They must now expect high losses, as houses that have not been renovated to improve energy efficiency are increasingly losing value. Due to the increased energy prices and the prospect of expensive renovation measures, these owners are at risk of their property not providing the financial support they had hoped for in old age.
With the rise in energy prices, the price gap between new buildings with high energy efficiency and older, less efficient buildings has widened significantly. In the summer of 2021, before energy prices rose sharply due to the geopolitical situation, the price difference between the best and worst energy efficiency classes was still around 11 percent. In the following quarters, this discount stabilized at a high level.
For this analysis, JLL evaluated around 5,000 listings of apartment buildings. Most of these are rented out by professional investors, while some are owned by private landlords. According to JLL, the price reductions tend to be higher for single- and two-family houses, as homeowners bear the increased energy costs themselves. In rented apartment buildings, on the other hand, the additional costs can be partially passed on to the tenants, which alleviates the price pressure on owners of these properties.
Overall, it is clear that energy-inefficient properties are becoming significantly less attractive due to rising energy costs and legal uncertainties. The high renovation costs and the uncertain situation on the energy market are particularly depressing prices. Buyers must therefore prepare for further price reductions, but should also include the long-term costs of energy-efficient renovation in their considerations. People who have bought an older house as a retirement plan in particular are facing a significant financial risk as their properties are losing significant value.
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The Rising Importance of Energy Efficiency in Real Estate: A Growing Price Gap Between Efficient and Inefficient Properties
The real estate market is undergoing a significant shift, with energy efficiency becoming an increasingly crucial factor in determining property values. As energy prices continue to rise and environmental concerns grow, properties with poor energy performance are facing a significant decline in value. According to recent data from Jones Lang LaSalle (JLL), the price difference between buildings with the best energy efficiency and those with the worst efficiency class has increased, with a staggering 27% discount for houses with poor energy performance [1[1[1[1[1[1[1[1].
The Impact of Energy Efficiency on Property Values
Energy-efficient houses are designed to use and waste as little energy as possible [2[2[2[2[2[2[2[2]. They are built with sustainable materials and incorporate features such as insulation, double glazing, and renewable energy systems. These features not only reduce energy consumption but also lower greenhouse gas emissions and minimize the carbon footprint of a property.
On the other hand, energy-inefficient properties are becoming less attractive due to the high renovation costs and uncertain situation on the energy market. Buyers of such properties are often faced with significant maintenance costs, which can be a significant burden. The Heating Act further increases these uncertainties, putting pressure on the prices of existing buildings [3[3[3[3[3[3[3[3].
Renovation Costs and Energy Efficiency
A key factor in the price decline for poorly insulated properties is the high renovation cost. Buyers of houses that have not been renovated to improve energy efficiency are often faced with significant maintenance costs. Although these costs have fallen slightly in recent months, they are still well above the general inflation rate and the development of construction costs, as JLL analyzes.
The Effects on Homeowners and Investors
Homeowners who have bought older properties as a retirement plan or built them themselves are particularly affected. They must now expect high losses, as houses that have not been renovated to improve energy efficiency are increasingly losing value. Due to the increased energy prices and the prospect of expensive renovation measures, these owners are at risk of their property not providing the financial support they had hoped for in old age.
The Bottom Line
energy efficiency is becoming an increasingly important factor in the real estate market. Properties with poor energy performance are facing a significant decline in value, while those with high energy efficiency are becoming more attractive to buyers and investors. The high renovation costs and uncertain situation on the energy market are depressing prices, and buyers must prepare for further price reductions. However, they should also include the long
The Rising Importance of Energy Efficiency in Real Estate: A Growing Price Gap Between Efficient and Inefficient Properties
As energy prices continue to rise, the energy efficiency of real estate has become a critical factor in the market. Properties with high energy consumption are experiencing significant price discounts, whereas energy-efficient buildings are holding their value. According to recent data from Jones Lang LaSalle (JLL), the price difference between buildings with the best energy efficiency and those with the worst efficiency class has increased [1].
Real Estate Prices Plummet: 27% Discount for Houses with Poor Energy Performance
In the second quarter, the average price difference between apartment buildings in classes A/A+ and the most energy-intensive houses in classes G/H was around 27%. This represents a significant increase from the first quarter, where the difference was around 25%. The average price reduction across all energy efficiency classes rose from 16.7% to 20% [[2]].
Renovation Costs Burden Buyers
One of the primary factors contributing to the price decline for poorly insulated properties is the high renovation cost. Buyers of houses that have not been renovated to improve energy efficiency are often faced with significant maintenance costs. Although these costs have fallen slightly in recent months, they are still well above the general inflation rate and the development of construction costs [[3]].
High Losses for Older Properties for Retirement Provision
Homeowners who have bought older