Impact of Ground Source Heat Pumps on House Sales Prices in Finland

Buildings contribute to approximately 28% of global energy-related emissions. Heat pumps is a key technology for decarbonizing heating emissions of buildings. This study focuses on ground source heat pumps (GSHP) which is increasingly used in colder regions. Since for an average home the capital expenditure of GSHP can be an order of magnitude higher than in traditional heating, it is important to understand whether GSHP has an impact on house transaction prices. Hedonic analysis reveals that GSHP heated detached houses have a statistically significant price premium (3.97% to 6.25% on 95% interval). This premium seems to be increasing over time, which could be related to higher growth rates in energy prices than in wages. The results suggest that an average house in Helsinki metropolitan area could cover the required capital expenditure of a GSHP system with the sales price premium whereas in other Finland five years of savings is required on top of the premium. Hence in locations with lower housing prices, the house must be owned for a longer period of time to recapture the investment costs. This is important to understand when national energy aid policies are planned