Scandinavian Working Papers in Economics

Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin)

No 18/1: The Relationship between Environmental Factors and Purchasing Decisions in the Residential Market

Agnieszka Zalejska Jonsson ()
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Agnieszka Zalejska Jonsson: Department of Real Estate and Construction Management, Royal Institute of Technology

Abstract: The overarching aim of this study is to investigate the factors behind the relatively slow evolution of the green residential housing market in Sweden. The intention is to examine stated willingness to pay (WTP) for green and low energy apartments, and to explore which factors have a significant effect on stated WTP among apartment owners. A green building was defined as a building certified according to the environmental scheme and a low energy building as a building designed and constructed with high energy efficiency goals. Data for this study were collected through a survey conducted among occupants of comparable apartment buildings: two green and one conventional. The study applied a quasi-experimental method; survey responses regarding factors affecting purchase of apartment, stated WTP and environmental literacy have been analysed using descriptive statistics, the Mann–Whitney (rank sum) test and logistic models. Comments received from respondents have been used for further interpretation of results. Results indicate that environmental education has a significant effect on stated WTP. Occupants who declared higher WTP showed a higher level of environmental literacy and indicated that energy efficiency was one of the important factors that affected their decision to buy an apartment. It is concluded that growth in the green housing market in Sweden might be achieved if policymakers and developers engage in active education in the environmental labelling system. The demand for green buildings is more likely to increase when the difference between green and conventional buildings is easily understood and information is not only delivered by the estate agent, but is part of an environmental education programme.

Keywords: Consumer; environmental education; housing market; stated WTP

JEL-codes: Q56; R21

5 pages, January 22, 2018

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