The National Bank of Belgium, together with KU Leuven and the University of Antwerp, published research on how the Flemish energy renovation obligation has affected house prices. The analysis finds that energy efficiency has become a stronger determinant of house prices in both the Flemish and Walloon Regions since 2023, while the Flemish obligation itself has only a limited additional negative impact on prices of the most energy-inefficient homes and has been accompanied by more clustering of reported energy scores just below label thresholds. Using the Flemish energy label definition for all regions for comparability, the study shows that 2023–2024 prices stayed broadly in line with 2022 for class D homes, rose for class C, increased further for classes A and B, and declined for classes E and F as buyers and banks increasingly factor energy scores into purchase decisions and mortgage conditions. The Flemish renovation obligation introduced in January 2023 requires buyers of homes with a class E or F label to renovate within five years of purchase to reach at least class D; these homes became around 2% cheaper relative to both comparable Walloon homes and class D homes in Flanders, which the authors link to renovations already being common and renovation costs being largely priced in. The research also finds increased “bunching” of energy scores just below the renovation-obligation threshold, and smaller increases just below other thresholds in both regions, which is likely partly due to misreporting given the focus on properties with only one pre-sale energy performance certificate. The paper highlights distributional implications: a small negative effect on the wealth of owners of energy-inefficient homes, some additional price headroom for buyers who renovate, and a potentially large compulsory investment for buyers who did not plan to renovate, which could hinder access to home ownership for those without sufficient repayment capacity. It frames the results as relevant for other jurisdictions considering similar policies, including EU member states implementing the revised Energy Performance of Buildings Directive’s 2030 targets.
National Bank of Belgium 2025-01-14
National Bank of Belgium study finds Flemish renovation obligation cut E or F home prices by about 2% and increased energy label bunching
Research by the National Bank of Belgium, KU Leuven, and the University of Antwerp finds energy efficiency increasingly influences house prices in Flanders and Wallonia. The Flemish energy renovation obligation has a limited negative impact on prices of energy-inefficient homes. The study notes clustering of energy scores below label thresholds and highlights distributional effects, including potential barriers to home ownership due to renovation costs.