The energy transition is redefining the dynamics of the real estate market. From now on, she places the green value of housing at the heart of the concerns of buyers and investors. In 2024, this trend will strengthen with increased awareness of the impact of the energy performance of buildings on their value. This phenomenon pushes owners, particularly in large French cities, to consider renovations to enhance their property and meet environmental requirements. Deciphering the issues surrounding the green value of housing.
Summary :
What is the green value of housing?
A new dimension of real estate valuation
The green value of housings refers to the increase in the value of real estate. This gain in value depends mainly on the energy performance of the property, but also on its environmental impact. In France, this notion has taken a central place in real estate transactions. Especially since the implementation of energy performance diagnostics (DPE). Since the latter make it possible to classify housing according to their energy consumption and their greenhouse gas emissions.
The direct impact of DPE classification on market prices
According to the Notaries' Real Estate Outlook, this classification directly influences market prices. Because well-rated properties (A or B) sell for higher prices. While those classified F or G, considered “thermal sieves”, suffer significant discounts. Indeed, the share of sales of energy-intensive housing (classified F and G) in 2023 remains high, reaching around 17%. However, this proportion, although relatively stable, illustrates a segment of the real estate stock which is under strong pressure in terms of discounts and regulatory revisions.
Evolution of the calculation of DPE and regulatory adjustments
Since the introduction of energy performance diagnostics (EPD) in 2006, this classification has been widely criticized for its frequent revisions of the calculation method. Since September 2021, a so-called “real consumption” method has been replaced by a standardized approach. Thus, it aims to better correspond to the physical characteristics of the property and the specificities of each accommodation.
Green premium: an increasingly significant gap in value
According to statistics from the Banque des Territoires, the difference in value between housing classified A and housing classified F can be up to 20%. This premium is partly due to growing buyer demand for energy-efficient goods. Which reflects an ecological and economic awareness in current real estate choices. From now on, the value of a property is no longer linked only to its location or its surface area, but also to its energy efficiency and its ecological impact.
Impact of energy standards on market prices
With the acceleration of regulations on energy performance, the effects on the real estate market are being felt more than ever. Indeed, in the first half of 2024, the most energy-intensive housing represents a notable share of transactions, particularly those in classes F and G. However, the sharp increase in their presence observed in 2022 has stabilized. Which perhaps indicates a market adjustment to new energy standards.
On the other hand, the share of best-rated homes (A and B) remains low, representing only around 9% of sales. However, without certain regions such as Île-de-France, well-rated apartments are valued more. This thus illustrates the importance of energy performance as a criterion of choice for buyers.
To this end, the French government imposes progressive restrictions on the rental and sale of the least efficient housing (energy-climate law). This encourages owners to carry out renovation work to improve the green value of their homes. Indeed, housing classified F and G, which represents around 17% of the French real estate stock, risks a significant reduction in their market value if they are not brought up to energy standards.
The new standards, which make renovations compulsory for energy-intensive housing, also influence real estate demand. A property labeled “energy efficient” attracts more potential buyers. These are motivated by long-term energy savings, but also by a growing concern for the ecological footprint of their housing. As a result, high energy performance properties sell more quickly and at a higher price. Which thus reinforces the green value premium.
In 2024, efficient housing could see its value increase by 5 to 10% on average compared to energy-intensive properties.
Financial issues for owners and buyers
For owners, bringing a home up to standard can represent a significant, but profitable, investment. Thus, we observe that the median price of the worst-performing homes held up slightly in 2023. We note an increase of +1% for apartments and +2% for houses. While better rated properties benefit from premiums of up to +15% in Provence-Alpes-Côte d'Azur.
Energy renovation work, although costly, benefits from financial support such as aid from the National Housing Agency (Anah) and the MaPrimeRénov' system. In fact, this aid reduces the overall cost of the work. In this way, they allow owners to more easily comply with new legal requirements, while increasing the market value of their property.
Buyers, for their part, are increasingly sensitive to this ecological dimension. Especially since green real estate loans, offered by certain banks, make it possible to obtain advantageous financing conditions for environmentally friendly properties. This trend could, according to experts, contribute to a broader dynamic of valorization of ecological goods in the coming years.
Development prospects for green value in 2024 and beyond
The dynamic of the green value of housing seems destined to strengthen, particularly with the new regulations imposed until 2030 to eradicate thermal sieves. To this end, La Note de Conjoncture forecasts a contraction in the old housing market in the 2nd half of 2023 due to the drop in transactions. And this is partly caused by the constraints on the energy sieves. This forecast underlines the importance of reforms to stabilize and enhance the real estate market in the long term.
As these reforms come to fruition, forecasts show an increase in demand for green housing. This is especially true in urban areas, where energy costs are higher. In these regions, buyers are looking for sustainable solutions to deal with rising energy prices. This sustained demand promises to widen the value gap between efficient housing and energy sieves, marking a structural change in the real estate market in France.
