Energy-Saving Renovations: The Key to Stable Property Values

Real estate experts have discovered that properties with poor energy performance, such as uninsulated apartments or your parents’ house, have seen a significant decrease in value over the past year. However, this trend seems to have stopped, with one exception. Older, unrenovated houses are still seeing a decrease in value that is almost equivalent to the costs of energy-saving renovations.

The stabilization in prices is due to several factors. Construction costs have stabilized and even declined in some trades, and the costs of financing have also stabilized after a rise in interest rates. According to the study, in the first quarter of the year, there was an average price difference of 25.1 percent between apartment buildings with top energy efficiency ratings (A/A+) and the worst ratings (G/H), compared to 26.9 percent at the end of last year.

With rising prices for electricity and gas, energy efficiency has become increasingly important in property purchasing decisions. The new law on heating replacement by the federal government has also caused uncertainty in the market. Owners of single- and two-family homes have to reduce prices significantly more when selling because buyers would bear higher energy costs if they choose to live in the property themselves.

Selling unrenovated properties remains difficult, especially in rural areas where buyers may struggle to offset the costs of expensive energy-saving renovations with lower rental income. The gap between old and new properties is expected to widen according to expert Sören Gröbel.

Despite these challenges, there’s been a slight improvement in property values overall which suggests that energy efficiency is becoming a key factor in property valuation and purchasing decisions, signaling a positive shift in the real estate market