Energy-efficient home demand doesn't currently impact property value

Based on the RICS’ UK Residential Market Survey for October 2021, it also found that most new home buyers don’t factor in energy efficiency in their purchase. 

Overall, respondents to the monthly survey pointed to another dip in the volume of sales agreed over the month, recording a net balance of -9%, with the main issue being a lack of stock for would-be buyers to choose from. 

And, while there was a rise in the number of new enquiries - with the net balance going up by 10% - agents currently only have an average of 37 properties on their books. Meanwhile, -20% of contributors have reported a fall in the number of new properties being listed for sale. 

This not only has an impact on sales activity but is a significant factor behind current house price rises. In addition to this, there has been, on net balance, a 70% increase in respondents citing a rise in house prices, with this trend expected to continue over the next three months and year ahead. 

The RICS also asked some extra questions in the October survey to gauge consumers’ willingness to reduce their home’s carbon emissions, with one-third of respondents seeing an uptick in demand for energy efficient homes. However, this isn’t currently impacting the property value. 

Alongside this, more than three-quarters of respondents see little to no impact of having an energy efficient property on sale prices. And, whilst 62% of respondents anticipate that demand for energy efficient properties will improve over the coming three years, 85% believe the current barrier for many to enhance their property’s energy efficiency is cost. 

Commenting on this news, RICS’ chief economist Simon Rubinsohn, said: “Although the mood music around interest rates does appear to be shifting, for now the stronger influence on the housing market is the ongoing imbalance between demand and supply. 

“The inventory on agents’ books appears to have slipped back towards historic lows and this seems to be underpinning both the current price trend and expectations for the next year. Meanwhile, although there is likely to be some drop in activity in the immediate aftermath of the expiry of the stamp duty break, most activity indicators currently remain solid. 

“Indeed, the main challenge for buyers looking forward may once again be a lack of choice of property on the market. As long as there is a lack of choice for would-be buyers, it is clear that buyers’ ambition to be more climate-friendly will have to move down their list of priorities. 

“The data from today’s report suggests that additional government funding and investment alongside new financial solutions appealing to homeowners, landlords and investors could pave the way for decarbonising UK homes.”

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