Energy Ratings and House Prices
21st Dec 2023
A new report shows the growing influence of energy ratings on real estate prices.
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Energy Ratings and House Prices
21st Dec 2023
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A new report shows the growing influence of energy ratings on real estate prices.
"The French are selling their poorly insulated homes", according to Edouard Grimond, spokesman for the Conseil supérieur du notariat (CSN), at a press conference earlier this month.
The notaires report that poorly insulated homes now account for 18% of all sales, 7 points more than two years ago.
Of the 37 million homes in France,nearly 7 million have an energy rating of F or G. Since summer 2022 the rents of properties with a F or G rating have been frozen, and since 1st January 2023 properties classed G cannot be rented out. In 2025 F rated properties will also be excluded from the rental market.
What was a "comfort" trend just a few years ago is fast becoming an essential criterion for renting or buying real estate.
"Three-quarters of those surveyed believe that it is important," says Edouard Grimond.
The study showed that the energy rating of a property is now the third most important criterion in the choice of housing, after a garden and a larger property.
This emerging concern is impacting prices, which are already being battered by rising interest rates. A poorly insulated property is difficult to sell. Houses classified F and G, in particular, are subject to a sharp discount, between -5% and -21% compared to the prices of class D properties (the most numerous), as can be seen from the graphic below.
Unsurprisingly, the price gap between the 'passoires thermiques' (leaking sieves) and energy-efficient homes is becoming wider. In the context of high interest rates and falling prices there has been greater room for negotiation on this type of property.
This is even more the case since the implementation of the mandatory energy audit on April 1, 2023 for the sale of houses with an F or G energy rating. The audit must make recommendations as to the work required to bring the property up to a satisfactory energy performance, and the costs detailed are a real lever for negotiation, with an inevitable impact on the final sale price.
Other housing professionals have also commented on the potentially negative impact on the housing market of energy ratings and audits.
Nevertheless, the Paris notaires recently pointed out there are many buyers who see opportunities in the discounted purchase of a poorly rated homes, which they can bring up to a suitable standard and on-ward sale for a profit.