European Energy Crisis: Did Electricity Prices Shock Real Estate Markets?
In 2021–2022, European energy markets faced a significant energy crisis resulting from the coincidence of post-pandemic recovery with Russia’s invasion of Ukraine and a reduction in gas supply. This situation resulted in many households across Europe facing much higher energy costs. Norway’s electricity markets differed during the energy crisis, with the southern regions facing unprecedented price increases and the northern regions experiencing little to no change.
In “European Energy Crisis: Did Electricity Prices Shock Real Estate Markets?” author Becka Brolinson and her co-authors examine whether increasing energy prices and energy efficiency were reflected in Norway’s housing markets. Using data on 93,000 home sales between July 2020 and August 2022, the authors find overall that energy efficiency becomes more strongly integrated into house prices when energy prices rise, particularly for single-family homes.
The results of this study can provide valuable insights for societies facing similar disruptions, including energy crises, changes in demand, or other resource shortages.
Senior Economist
