THE EFFECT OF ENERGY PERFORMANCE ON THE RESIDENTIAL PROPERTY PRICES IN CROATIA

In the last twenty years, the Croatian housing market has passed through various stages of development. After the very propulsive period in the first eight years of this century, the seven-year crisis has begun in 2008. The crisis period was characterized by negative trends in the construction and sale indicators of the residential real estate. The decrease in production and employment in construction sector was also present in this period, and all of this was followed by a decline in residential property prices. Positive market trends are noticeable after 2015, when increase in construction indicators, number of transactions and housing prices is observed. Market experts started to point out that crisis has resulted in a change of the housing market participants' attitude in the sense that great attention started to be paid to the quality of construction. The issue of energy efficiency in all economic fields, including buildings, has also begun to be increasingly emphasized. The basic premise of the research is that better energy performance of residential real estate is a factor that raises the quality of the same, and consequently increases their price. The basic goal of this paper is to examine the effects that certain energy properties (concretely, energy performance certificates and type of heating) have on the price of residential real estate in Croatia. The mentioned effects were estimated within hedonic model of housing prices. The analysis was conducted using Ordinary Least squares method for Croatia, but also for individual, geographically smaller markets. The results indicate that the type of heating is a statistically significant determinant of dwelling prices, but that the magnitude of the impact varies between different regions. Despite initial expectations, no evidence has been found that better thermal properties, measured by a higher energy performance certificate, increase the price of dwellings. This indicates certain specifics of the Croatian market, which can be explained by specific government measures which were adopted in the recent period and likely have an effect on the market, but they are not included in this research.