Valuation Of Energy Costs In The Rental Housing Market: Evidence From Türkiye

Official URL: https://risc01.sabanciuniv.edu/record=b3422597

This study investigates the impact of energy expenditure on housing rent in the housing market in Türkiye. We explore whether energy efficiency investments, proxied by energy costs, are capitalized into rental prices by exploiting a sample of nearly 39,000 rental dwellings from 2002 to 2019. Our results suggest that 100 TL decrease in energy bills is associated with an approximately 8 TL increase in rents, providing evidence of market failures and the role of behavioral factors in the rental housing market. We attribute market failures to informational and behavioral barriers and highlight the importance of government interventions toward eliminating these problems.