How do solar panels affect property prices in the UK?  

A team of researchers have used Zoopla Property data, held by the UBDC data service to estimate the returns to solar panels in the UK housing market.

In this blog, Elias Asproudis (Swansea University), Cigdem Gedikli (Swansea University), Oleksandr Talavera (University of Birmingham), Okan Yilmaz (Swansea University) outline the findings from their paper:

‍Returns to solar panels in the housing market: A meta learner approach .

‍Introduction

In the face of climate change and rising energy costs, more and more homeowners are turning to renewable energy solutions like solar photovoltaic (PV) panels. Solar panels not only offer a way to generate electricity but also provide opportunities for savings on energy bills and potential earnings through government feed-in tariffs. But aside from the obvious energy benefits, could these eco-friendly investments also increase the value of homes?

Our paper, recently published in Energy Economics, explores how the installation of solar PV panels is affecting property prices in the UK housing market. Our findings suggest that houses with solar panels tend to sell at a premium, making them a valuable asset for both sellers and environmentally conscious buyers. As the adoption of green technologies continues to grow, this research could have significant implications for homeowners, policymakers, and the future of the real estate market.

Background

The motivation for this research stemmed from a growing interest in the intersection between sustainability and property values. Solar energy has been gaining popularity as an alternative to reduce greenhouse gas emissions and energy costs. The UK government has also introduced incentives to encourage renewable energy adoption, making solar panels more accessible to homeowners.

Previous research has explored the impact of various home improvements on property prices, such as new kitchens or bathrooms, but the effects of green energy technologies on real estate values remain underexplored. Given the potential energy cost savings and environmental benefits, we wanted to investigate whether solar panels, as an energy-efficient upgrade, add value to homes. To answer this question, we conducted an extensive study using Zoopla property data, covering nearly 1.5 million properties listed for sale across the UK. By applying advanced machine learning techniques, we were able to isolate the effect of solar panel installations on house prices.

Key Insights from Our Research

Our findings revealed that houses with solar panels are associated with a price premium ranging from 6.1% to 7.1%. This means that, on average, a house with solar panels could sell for an additional £14,062 to £16,368 compared to a house without. These results are notable, especially when considering the rising energy costs and the increasing interest in eco-friendly living.

We also found that the price premiums for solar panels are more pronounced in certain regions and market segments. The highest premiums were observed in areas with higher poverty rates and in both the lowest and highest price brackets. For wealthier buyers, solar panels may signal a status symbol, reflecting their commitment to sustainability. For lower-income buyers, the potential savings on energy bills likely drive the added value. This insight is particularly important for policymakers, as it highlights the need for equitable energy policies that ensure low-income households can access green technologies like solar panels.

Future Plans

While the research so far has focused on understanding the relationship between solar panels and property prices, there is more to come. Our next steps include looking deeper into how these trends evolve overtime as solar energy becomes more mainstream and installation costs continue to decrease. We also aim to engage further with policymakers to provide evidence that supports continued subsidies and incentives for solar panel installations, particularly in areas where uptake is still relatively low.

Conclusion

As the UK continues to tackle climate change and move toward a greener economy, the role of solar panels in the housing market cannot be overlooked. The evidence from our research shows that energy-efficient, eco-friendly homes are not only better for the planet but can also be financially rewarding for homeowners. By continuing to invest in renewable energy and offering incentives to make solar panels more accessible, it is possible to create a housing market that benefits both people and the environment.

Our research contributes to a growing body of work that demonstrates the tangible benefits of green investments. For homeowners considering solar panels, this study provides clear evidence that the investment pays off - not only through energy savings but also by increasing property values. And for policymakers, it offers compelling reasons to continue supporting solar energy as part of the UK’s broader strategy to combat climate change.

Authors: Elias Asproudis (Swansea University), Cigdem Gedikli (Swansea University), Oleksandr Talavera (University of Birmingham), Okan Yilmaz (Swansea University).

Full paper: Returns to solar panels in the housing market: A meta learner approach

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