Purpose- The purpose of the paper is to present a case study from Hungary of a renovation, in order
to estimate the effect of greater energy efficiency on residential housing prices.
Design/methodology/approach - The paper uses a dataset on real estate transactions. The sample
consists of all transactions from 2003 to mid-2012 in a treatment and a control group in Budapest's
third district. The paper uses a difference-in-differences framework to test whether prices in a large
block of flats - the largest in Hungary - which underwent major energy-efficiency related renovation
developed differently following the renovation than prices in comparable, neighbouring blocks.
Findings - Our results show that the renovation resulted in prices 9.42% higher than they would have
been absent the renovation, which amounts to over 1 million Hungarian forints on the average flat.
This can be contrasted with around 70 thousand forints in yearly energy savings and the 1.3 million
forint cost of the renovation per flat. The latter implies that outside funding may also be required to
make investment into energy-efficient renovation worthwhile.
Originality/value - The paper is the first empirical investigation into the effect of greater energy
efficiency on residential housing prices in Hungary, and fits well with an emerging literature on the
subject concerning other countries. It also has relevance in the ongoing debates about the possible need
for government funding, and the consequences of making information on energy efficiency more
transparent
