RESALE OF GREEN HOUSING COMPENSATES FOR ITS PREMIUM PRICING: AN EMPIRICAL STUDY OF CHINA

Abstract

ABSTRACT Green housing reduces resource consumption and protects the ecological environment. Sustainable buildings and construction have gained increasing attention in the last decade. Many empirical studies have confirmed that green housing imposes a price premium at the presale stage. The high price could be a concern that prevents homebuyers from purchasing green buildings. However, there is a lack of empirical evidence on whether the premium pricing could be compensated for by the resale price. To address this gap, this study establishes a hedonic regression model to estimate the price premium of green housing at the resale stage. The results show that green housing certified with the Chinese Green Building Label (CGBL) offers a 6% price premium compared with non-green housing at the resale stage. The results also show that green housing with a higher level of green certification, e.g., the 3-star CGBL, provides a greater price premium at resale. The findings indicate that home-buyers can obtain financial compensation for the high cost when purchasing a green home. Our findings also indicate that the price premium for reselling a green home is not always enough to compensate for the purchase cost in different cities. Policy recommendations for government promotion of green housing are also discussed.