Building Renovation and Property Value

Master Thesis

Departmant of Build Environment and Energy Technology

Building Renovation and Property Value

” Kronoberg County, Sweden”

Author:

Maryam Shahbandian

Master in Sustainable Energy processes and systems, ms225cq@student.lnu.se

Supervisor: Dr. Brijesh Mainali Course Code: 4BT30E

Submission Date: Jun 2019, 15 Credits

Abstract

The concern of climate change and Greenhouse Gas emission have increased national consideration toward energy efficiency. Despite noticeable action which have taken by EU cities and Sweden government to mitigate the climate change, there is still shortage in appropriate energy measurements in old residential buildings. Due to the fact that a large share of residential buildings in Sweden have constructed more than 40 years ago, most of them need energy renovation to enhance efficiency and saving more energy. In order to encourage home owners toward energy efficiency renovations, some cost effective measurements have to introduce to people with the view of effect on property value. To this end, 50 detached houses and villas in Kronoberg County in Sweden have been chosen and analyzed to identify how renovation can increase the property value. These houses have been set in different categories by location, heating system, deep renovation, energy and aesthetic renovation. After that, compares the sold prices and biding prices for each category. Moreover, it analyses the people behavior toward renovation to see how can motive people to adopt necessary energy efficient renovation. This research also shows the current situation of building renovation, the most favourite renovation which are adopted by people as well as providing information about the factors affect the value of the house after renovation.

Keywords: Building Renovation, Energy Efficiency, Deep Renovation, Pay Back, Cost Effective Renovation, Aesthetic Renovation, Property Value

Preface

This thesis is my final work of the MSc in Sustainable Energy at Linnaeus University in Växjö, Sweden. This work has been carried out at the department of Build Environment and Energy Technology during the spring of 2019.

I would like to express my sincere gratitude to Dr. Brijesh Mainali as my supervisor at Linnaeus University. I highly appreciate him for his valuable and precious help, his constructive guidance, his kindness and his useful feedback. I also would like to express thanks to Professor Krushna Mahapatra from Built Environment and Energy Technology Department for his help, his patience, motivation and his useful guidance.

This master program in Linnaeus University was directly related to my professional activity in my home country Iran where I worked as teacher at Architecture University in Tehran for 5 years. I was teacher for courses related to sustainable architecture and effect of environmental condition on building design. Therefore, for a long time I have been interested in these topics which is related to energy saving in building. Hence, this research knowledge in sustainable energy with sustainable approach to the building renovation can play a prominent role in my career as architect because I wanted to communicate high professional quality to my students in sustainable architecture so that they, in their future career, could demonstrate their professional skills to their utmost best.

I would like to express my thanks to my Iranian teacher at Linnaeus University, in Energy Department, Dr. Farshid Bonakdar for his help regarding building renovation in Växjö and for sharing his experiences and knowledge and for his inspiration through the semester. I am grateful to my friend, Ehsan Pourhadi at Linnaeus University for his help and his useful comments. I must express my thanks to my Belgium friend Dr, Gaston Demarée, from Royal Meteorological Institute of Belgium who is specialist in the history of climate. I really appreciate his help, experiences, tips, information and his guidance during last 4 years.

Lastly, thanks to all of my dear friends in Växjö, Jenny Larsson, Peter, Calle, Wilhelm, Rahul, Antoine, Soltan and Birgit Jonasson for their help and support during theses 2 years that I was living in Växjö. I must also say thanks to all those who answered to my questionnaire form for this thesis regarding building renovation.

Above all, I must express my sincere gratitude to my respectable father Ardeshir and my mother Farah for their love, help, motivation and their support I am proud of them and appreciate their efforts to support me financially and give me this opportunity to study in Sweden and follow my dreams.

Maryam Shahbandian Växjö, Sweden, Spring 2019

Table of content:

Abstract……….i

Preface………...ii

List of Figures……….iii

List of Tables………...v

Acronyms and Abbreviations……….vi

1. Introduction………..1

1.1. Research Questions………...2

1.2. Motivation……….2

1.3. Structure of Thesis……….…....2

1.4. Aims and scope……….….3

2. Background……….…..3

2.1. Climate Change and building sector……….….3

2.2. Energy use in Sweden and building sector……….…...…4

2.2.1. Heating system in residential building in Sweden………4

2.3. Importance of building renovation in Sweden……….………..5

2.4. Current Situation of building renovation in Sweden……….5

2.4.1. Aesthetic renovation………5

2.4.2. Energy renovation………6

2.4.2.1. Energy class………6

2.4.3. Deep renovation………...7

2.4.5. Government financial policies toward renovation in Sweden………...7

2.4.5.1. Effect of tax deduction on renovation cost………..8

3. Method………..8

3.1. Methodological framework………...8

3.2. Interview, personal contact and questionnaire………..9

3.3. Literature Search and Review………..……….9

3.4.1. Interlinkages between property value and renovation in Sweden……….10

4. Analysis and Result……….10

4.1. Property value in different region in whole Kronoberg ………..10

4.2. Property value, aesthetic renovation and deep renovation……….……..11

4.3. Highest and lowest zones and property value for different renovation…………...12

4.4. Property value and energy class………..……….………12

4.5. Property value and the number of rooms……….14

4.6. Important renovations by items...14

4.7. Statistical analysis for different kind of renovation……….……15

4.8. The result of data analysis in comparison with questionnaire...15

4.9. Interpretation of barriers and challenges regarding deep renovation…………...…16

5. Discussion and Conclusion ………..….….17

6. Recommendation………18

7. Further work………..…….18

8. References………..…18 Appendix A. Questionnaire ……….………I A.1: Question 1 to 4 in questionnaire………...IV A.2: Question 5 to 7 in questionnaire………..VII

List of Figures

Figure 1. Total final energy use, by sector, from 1970 until 2016, TWh [Sweden Energy

Agency, 2017]……… ……….….4

Figure 2. Energy Classes [Adapted from Boverket. The National Board of Housing 2019]……….……6

Figure 3. Comparison of property value in different region in whole Kronoberg…………11

Figure 4. Classification of renovation and property value………..………….11

Figure 5. Comparing highest price (Öster) and lowest (Alvesta)………...12

Figure 6. Relation between property value and energy class………..13

Figure 7. Relation between property value and the number of rooms………14

Figure 8. Distribution of different renovation by items………..14

Figure 9. Percentage of popular renovation in people point of view……….15

List of Table

Acronyms and Abbreviations

DH District Heating

EEA European Energy Agency

EPB Energy Performance of Buildings EU European Union

GHG Greenhouse Gas

HRV Heat Recovery Ventilation IEA International Energy Agency

IPCC Intergovernmental Panel on Climate Change KWh Kilo Watt hour

LCA Life cycle analysis MFB Multi-family building SEK Swedish Krona SFH Single-family house

TPB Theory of Planned Behavior TWh Terawatt hour (10¹² Watt hour) US United States of America UK United Kingdom

1. Introduction

The rise in migration to cities and the subsequent growth of the urban “built” area would also add to the increase in world temperature, which has already ended in heat-related deaths across the globe. Based on the statistics issued by a paper published by the United Nations (2005), over 50 per cent of the world population is now living in cities, a figure that was only 30% only 50 years ago. Each year 67 million people are added to the present number of those living in cities. It also is projected that by 2030, 8.3 billion people (i.e.

about 60% of the global population) will be living in cities. This increase in urbanization is sure to exacerbate the Urban Heat Island (UHI) effect (Solecki et al. 2004). As put by a report released by the United States Environmental Protection Agency (2008), the modification land surfaces in urban areas and energy usage are the two most important contributors to heat waste in cities, respectively. Therefore, climate change now has an accomplice (namely, UHI) working together to wreak havoc on human life and future. The low ventilation power of the “gorges” generated tall buildings and the thermal mass which concrete and blacktop roads bring about help add 2–10°F to ambient air temperature in cities relative to the surrounding rural areas. (United States Environmental Protection Agency 2008)

In order to combat with issue of climate change and GHG emission associated with energy and buildings, various measurement have taken by Sweden and other EU cities. To this end, one strategy have been implemented on May 2010, under the name of 2020 target.

This target aims to decrease greenhouse gas emission by using renewable energy and saving more energy in different sector especially in building sector due to the fact that building sector has a great potential for saving energy especially in local and regional stage.

[European Commission, 2019].

Even though Sweden government along with European countries have implemented wide range of policies in terms of energy saving, some measurement are still needed to address the energy challenges regarding old residential building. As a case in point, a huge number of residential buildings in EU are using old heating system which have been installed until 1992, most of which has energy efficiency of 60% compare to new boiler with efficiency of 95%. More important is that adaption of replacing new system is affected by low information of consumers in terms of choosing environmentally friendly and efficient heating system [Meszerics, 2016]. In addition, there are several challenges regarding investment in building renovation which Sweden is dealing with. [Pardalis, 2019] In this regard, one challenges that inhibit measures toward energy efficiency renovation can be lack of data regarding existing energy saving renovation. [Palm & Reindl, 2018]

Due to the fact that deep renovation in building sector have large impact on reduction of energy consumption as well as reduction of greenhouse gas emissions [Salvali, 2017] and there is weakness in information of homeowners about choosing right heating system and energy measurement, this research tries to focus on importance of deep building renovation with concentration on cost effective energy efficiency refurbishment as well as property value after renovation.

1.1. Research Questions

The vast number of old residential building in Sweden with low energy efficiency heating system along with issue of climate change lead to several energy measurement in building renovation in Sweden and Europe. This thesis attempts to answer the following research question with regards to Swedish context.

Research Questions:

- Does building renovations pay back?

- Does deep renovation increase the property value?

The fisrt qustion essentially look further into the renovation of detached houses in both aestetic or energy aspect including renovation of building materials, thermal insulation, heating system, roof, sewage, window and facede. Moreover, with focous on market prices tries to analyse economic benefits and payback. In order to answer the second qustion, prices will be analysed, in particular prices regarding deep renovation including all type of energy saving renovation and heating system to show how energy efficency measurement affetc the value of the houses.

1.2. Motivation

There are several motivation driving force to undertaking this study. First of all, the matter of climate change and the effect of building sector and energy efficiency on emission of Carbone dioxide and its effect on environment. Indeed, building sector and energy renovation in residential building can be viewed as a key factor of mitigation of climate change. Therefore, cost effective deep renovation can be important factor for homeowners to take into account this important matter especially regarding energy and to see how much it can affect the property value. To this end, this study will evaluate the price of the buildings renovation especially regarding heating system, and deep energy renovation and compares it with aesthetic renovation and property value. This study also aims to increase the knowledge of homeowners regarding deep renovation and property value.

1.3. Structure of Thesis

In this thesis, first, introduction shows the overall information regarding the issue of climate change and the strategies which have been implemented by European Union to address this challenges. In addition, it gives general information about deep building renovation and the effect of old heating system on energy consumption. After that, it introduces research questions and motivation of the study. Secondly, in knowledge background express overall understanding toward residential building in Sweden, energy use and heating system, aesthetic and deep renovation, environmental consideration and governmental support policies for renovation of building, and current situation of renovation. Thirdly, method of the study which shows how data material have been obtained and analyzed and how questionnaire form have been created and distributed in the city of Växjö. After that, analyzing the data with different category of the average renovation prices and comparing each category have been presented to show the property value and economic benefit. This

part shows analysis of questionnaire form as well as analyses of data collection in both high energy efficiency renovation and aesthetic renovation and the effect of them on final price and property value. Fifthly, evaluation of the data and result of the analysis with economic consideration toward payback and property value in connection with background knowledge. At the end, discussion and conclusion of the study as well as some useful recommendation have been given.

1.4. Aims and scope

This research aims to enhance the general knowledge about valuable renovation and property value. This will analyses the value of 50 villa and detached houses in Kronoberg county in Sweden through different renovation measurement category including, aesthetic renovation, energy renovation and deep renovation which is including different type of energy measurement like insulation, roof, windows and facde. Moreover, It compares the value of the houses in differenmt area of the Växjö city which is the most populated city in Kronoberg, to show how deep renovation have affected the values of the houses. This work has economic approach to the existing deep renovation market as well as encouraging homeowners to the energy saving measurements for sustainable environment.

2. Background

This part indicates the background knowledge regarding energy consumption in Europe and Sweden with environmental consideration in using appropriate heating system as well as information about district heating which account for large share of heating system in Sweden. Moreover, information about importance of energy renovation in residential building with effect on climate change and global warming. It also shows the situation of building renovation, definition of aesthetic and deep renovation as well as strategies and incentives that the Sweden government have implemented to provide support for homeowners and consumers to encourage them for high energy efficiency building renovation.

2.1. Climate Change and building sector

The significant report on climate change released in 2007 by the Intergovernmental Panel on Climate Change (IPCC) unravels definitive evidence that global warming is real and has to be taken seriously. According to Solomon et al (2007) greenhouse gases are the culprit behind the warming within the past 50 years; in fact; global warming has affected physical and biological systems on all continents and oceans in the world, and more warming seems to be on the way.

Solomon et al (2007) contend that the global destabilization of natural systems bears strong witness to the worldwide effects of climate. Such effects involve the melting of icecaps and glaciers, rising sea levels, the disintegration of coral reefs, the early arrival of spring, the warming of oceans, and extreme weather patterns. The IPCC 2007 report goes on to project 1) more intense heat waves, heavy precipitation events, tropical cyclones, severe droughts, and extremely high sea level. Of course, the different regions in the world would all be affected, but to varying degrees.

The high thermal mass generated by road surfaces and the low ventilation of the “gorges”

created between tall buildings go hand in hand to further aggravated the deterioration caused by climate change (Luber et al. 2008). Luber et al (2008) maintain that the warming of the globe due to global warming and UHI can add 2–10°F to ambient air temperature in cities relative to the surrounding rural areas. Above all, the heat absorbed during the day and released at night by UHI is said to be related to excess mortality, epidemiologically speaking. (U.S. Environmental Protection Agency, 2006)

2.2. Energy use in Sweden and building sector

According to Sweden Energy Agency which shows the overall situation of energy in different years, it can be seen that in 2017 Sweden have reached a peak of 378 TWh in total final energy consumption. According to Figures 1 show that housing and service sector as well as industrial sector have a largest proportion of consumption with 146 TWh and 143 TWh respectively. In contrast, lowest proportion of consumptionis allocated to transport sector with energy use of 88 TWh. It can be identified that housing sector in Sweden account for approximately 40% of total final energy use. [Sweden Energy Agency, 2017]

Figure 1. Total final energy use, by sector, from 1970 until 2016, TWh [Sweden Energy Agency, 2017]

2.2.1. Heating system in residential building in Sweden

In residential building in Europe expenses of heating system can be identified as a most considerable expenses compare to other energy expenses. In other word, water heating has the largest proportion of house hold energy consumption by 80%. The amount of energy use by heating system is associated with several items including energy efficiency of heating system, climate condition and style of living. In Sweden, district heating account for large percentage among others heating system.

Sweden have aimed significant strategies to address the challenges associated with energy in residential building. As a case in point, one project with the name of STORM in Växjö

0 50 100 150 200 250 300 350 400 450

TWh

Total final energy use, by sector, from 1970, TWh

Industry Domestic transports Residential and services

in Sweden which focus on innovative district heating in order to augment the energy efficiency. This project in Växjö are being done with expansion of using renewable energy sources and using waste heat from industrial plants, which in turn, can affect significantly the housing sector. [Meszerics, 2016]

In Sweden biofuel account for large proportion of heat form district heating. In biofuel which originate from wood chips and pellets, is environmentally friendly due to the fact that emissions of carbon dioxide is very low. In this way, biofuel gain through residual plants and useless branches in forestry. Using Biofuel in district heating has some benefits including low price, using renewable fuels in district heating and low emission of hazardous particulate matter. [Sweden Energy Agency, 2015]

2.3. Importance of building renovation in Sweden

A large number of buildings in Sweden nearly three- fourth of whole building have constructed almost more than 40 years ago, of which 75%, need deep energy renovation by 2050 to meet EU goal regrading mitigation of GHG emission. [Bonakdar, 2018] Swedish single-family houses which have constructed between 1961 and 1980 need combination of different energy renovation especially in terms of thermal insulation and heat recovery ventilation to amend energy efficiency. [Ekström & Blomsterberg, 2016] In order to address this challenges regarding improving energy efficiency in building, Sweden have aimed a national strategy, base on which final energy consumption in heating and hot water until 2050 aimed to decrease by 45%. [Bonakdar, 2018]

2.4. Current Situation of building renovation in Sweden

There are several reasons that induce Swedish household for renovation of heating system, in particular, expensive price of annual cost and investment cost. [Klöckner & Nayum, 2017] According to Mahapatra, (2019) one survey which have done in spring 2017, in Kronoberg County in Sweden, reveals that 24% of homeowners had no decision for renovation of their home. In this case study, the people who are going to have deep renovation account for 5.5%. Besides that, the percentage of the people who maybe fulfil deep renovation is the least with 0.5%. This survey also shows that both houses which located in cities and those have been built before 1980 are prone to have refurbishment. [Mahapatra, 2019]

Currently there is urgent need for renovation of building specially renovation which is related to sustainable use of resources with high energy efficiency. [The National Board of Housing, 2015]

2.4.1. Aesthetic renovation

Aesthetic renovation is associated with visual feeling of customers. The vast majority of Swedish homeowners are interested in aesthetic renovation in particular kitchen and bathroom. Comfortable feeling in indoor places can be identified as an important factor which propel homeowners for relevant renovation. [Bravo, 2019]

2.4.2. Energy renovation

Energy renovation account for a small proportion of renovation measurements in detached house in Sweden. Physical renovation is linked to the energy measurement including thermal insulation, insulation of wall and installation of windows all of which, account for small share of renovation among Swedish people. [Bravo, 2019] The actions which are taken for increasing energy efficiency can affect the market price of the house and property value. In order to select a renovation in heating system, annual heating costs and investment have crucial role in Swedish home owner’s decision. [Klöckner & Nayum, 2017]

2.4.2.1. Energy class

In recent years Sweden have had great approach to the energy efficiency and decreasing consumption of energy in building. One of this important action is energy classification in building which have fulfilled from January 2019 with 7 category from A to G.

Figure 2. Energy Classes [Adapted from Boverket. The National Board of Housing 2019]

According to figure 3 which shows energy classification, class A shows as a lowest use of energy in contrast with energy class G with highest consumption of energy which are presented in report called energy declaration related to each building. Similarly, energy class C and B illustrate those buildings which meets the energy requirement and do not need any change in heating system during renovation. However, in Sweden there are a vast numbers of old buildings with energy classification of D, E, F, G. Therefore, almost all new buildings which meet the requirements of National board of housing in Sweden have energy class C as well as the building which have been renovated. [The National Board of Housing, 2019]

Energy Class

2.4.3. Deep renovation

In category of building renovation, deep renovation is consider a kind of renovation in building with high energy efficiency and low energy demand as well as potential for using renewable energy sources. This measurement along with energy performance which aim to increase energy efficiency in individual buildings can stand in deep renovation category [Salvalai, 2017] However, deep renovation can also reach by using different type of glazed spaces or sunspace with target to decrease cooling and heating energy need, and avoid wasting heat and potential for storage energy. [Fotopoulou et al., 2018]

2.4.4. Cost effective energy renovation in building

Heating system is one of the most important and most expensive part of any house in Sweden due to the long and cold winter. Therefore, choosing the suitable heating system can have considerable effect on the price of the electricity. Although, in renovation of heating system home owners have to take into account a lot of cost, in long term it can be a good investment for them as well as less effect on environment. However, it is important that people choose heating system depend on the weather condition and the age of building.

Some of the most usual type of heating system are rock heat, air / water heat pump, heat pump with extract air and pellet boiler, the most cost-effective of which for south of Sweden is air / water heat pump. The most environmentally friendly for the new residential places equipped with fan and duct is a heat pump with extract air. There are number of items which make owners to renovate heating system, the most important of which is an old heating system with expensive expenditure and environmental impact. [Mars, 2014]

Geothermal system, in which heat originates from rock underground, has the most expensive implementation, but with a lot of benefits including less energy cost and most environmentally friendly. Likewise, air/water heat pump has determined as a low electricity cost heating system which fits for weather condition which drops less than -10 c. In this energy category, heat pump with extract air has introduced as an environmentally friendly heating system which is Suitable for new houses equipped with ventilation ducts. [Mars, 2014]. Apart from that, in order to fulfill energy efficient actions, despite of all expensive changes in substitute heating systems that mentioned above, there are always some affordable actions toward saving energy in buildings. This measurements are including substitute the LED bulbs, repairing the cracks throughout the windows and doors as well as turning down the thermostat which can be conducted with minimum investment [Klöckner & Nayum, 2017].

2.4.5. Government financial policies toward renovation in Sweden

Sweden have implemented a rule in which builder, private homeowners and rental housing can receive SEK 3,600 per square meter of living area only for residential houses which is assigned to for the elderly with the age of 65 or more. Likewise, they can achieve additional support if they provide the house with staff who take care of residents of those buildings.

The money that they receive is associated with both the size and the number of residence who live in building. This policy have been launched to encourage more housing company

to consider elderly in housing market. Receiving support for construction or renovation cost means that rental apartments should continue this agreement related to the elderly usage for 8 years. In other words, during this 8 years the function of house have to be allocated to elderly and staff services, even if they sell the house. This financial support account for only 50 square meters of the residential place which supposed to be used by 2 person one of each is more than 65 years. Common places account for maximum 20 square meters. Likewise, renovation support for the apartment which use by only one person is account for 35 square meters as well as 15 square meters per apartment for common spaces.

In order to receive financial support, the construction procedure should take maximum 2 years. [Boverket, 2018]

2.4.5.1. Effect of tax deduction on renovation cost

Sweden Tax Agency has implanted a policy for renovation or extension of the house is called Rot deduction. In other words, home owner who aim to repair or renovate a house, they will be paid 30 percent of the cost with max SEK 50000 every year. Tax deduction is not including new buildings, greenhouses, garden, garage, balcony as well as the materials use for renovation. In contrast, Tax reduction can cover the cost of renovation of bathroom, renovation of kitchen, lighting work, drilling and installation of geothermal heating system, installation of air heat pump, installation of wood-pellet stove, installation of solar cells, drainage, renovation of wall paper, replacing doors and windows in residential buildings, changing roof tiles, changing and cleaning the ventilation, changing heat pump. [Eskilsson, 2019]

3. Method

In order to address the research topic, methodological approach have been considered, aiming to present how renovation can increase the property value. This methodology are consists of data for 50 houses which have been collected in spring 2019 from a vast number of real estate agency in Sweden in accordance with the last biding of each houses and sold prices related to Kronoberg County. In this regards, information about different kind of renovation for each houses have been collected. Moreover, one questionnaire form have been conducted in spring 2019. This survey which is associated with energy and aesthetic renovation have been answered by 34 people who are living in this area. Methodological framework, analyzing the data, and questionnaire information will be introduced below.

3.1. Methodological framework

For this study, 50 detached houses and villas in Kronoberg County in Sweden have been chosen and data analyzed. This data was followed by collecting the detailed information of the detached houses and villas in different district of Växjö which is a big city and University City in Kronoberg as well as Alvesta and Markaryd in Kronoberg. In the city of Växjö, 12 major districts have been selected in west, south, east, central and northern part of Växjö including, Teleborg, Öster, Högstorp, Östra Lugnet, Hovshaga, Arabi, Hov, Kalvsvik and Öjaby. In each district data have been analysed in different groups by location, age, heating system, energy and aesthetic renovation and the number of bedrooms.

This Study research focuses on the property value after renovation, therefore, houses have been classified to different categories depend on the type of the renovation that they have had, comparing the price of aesthetic renovation, energy renovation and deep renovation including all type of renovation. In addition, the average of the values for each category of renovation compare to each other to see how the type of renovation effects on the values.

Moreover, the average of the house prices in each district have been compared with other districts to compare the rate of the raise in price for a selected collection of regions in Växjö.

3.2. Interview, personal contact and questionnaire

In order to understand the general public idea regarding aesthetic and energy renovation as well as collecting data about typical heating system in this region, one questionnaire has been formed. This survey, have been responded by 34 people who are living in different district of Växjö and other town in Kronoberg County in south of Sweden. All respondents answered the same questions which the summery of the Questionnaire based on information as well as all questions have been added in Appendix A.

This questionnaire focuses on the different type of renovation to identify which renovation is the most popular renovation and people tend to spend money for it. This part is about most important renovation and ranking depends on the idea of respondents which is including renovation of kitchen, bathroom, heating system, stylish floor, roof, façade, window, bedroom and fireplace. Moreover, people were asked to mention the name of their heating system as well as age of their house and the name of area. In the survey, also it was asked general idea of people about importance of heating system renovation in order to be comparable with aesthetic renovation. The results and analysis of the questionnaire describe in next chapter.

3.3. Literature search and review

To collect data regarding existing and latest research, literature review have been performed in accordance with research topic in order to see what they have done. In this regards, in Sweden, one study carried out by Mahapatra, (2019) which shows despite the attempt of government of Sweden for spread of deep energy renovation with focus on low energy use, deep renovation of detached houses can be viewed as less interesting renovation due to the high cost and less effect on property price. [Mahapatra, 2019]. According to Salvalai, 2017, that carried out a study in Italy, identifies that more than 60% of existing buildings are more than 70 years and need deep renovation regarding energy saving. To this end, they have evaluated different type of deep energy measurement such as installation for wall and façade, concluding that deep renovation have a great impact on decrement of greenhouse gas emissions.[Salvalai, 2017] Another study has conducted by Bravo, (2019), which is regarding people behaviour toward renovation in Växjö city in Kronoberg County in Sweden. This survey illustrates that, homeowners are tendency to have aesthetic renovation in particular kitchen and bathroom. [Bravo, 2019]

3.4.1. Interlinkages between property value and renovation in Sweden

There are some changes which increase the value of houses for sale. These changes not only help to owner of the houses to sell their houses in higher price also makes the houses more comfortable and enjoyable even when they intend to continue living. Due to the fact that some homeowners prefer to fulfill renovation when is the time for selling, the benefit of these renovation can encourage them to carry out these changes while they are using the building.

Improving the kitchen has great impact on the value of the houses. In other words, customers give most priority to the kitchen compare to other renovation, therefor it can increase the price of the houses. The second important factor is refurbishing the bathroom including changing the color or replacing broken part which can significantly affect the final price of the houses. It can be seen that changing the heat source is the third most important factor in increasing the price of the houses for sale. Some home buyers refuse to buy a house with lack of sufficient heating systems and find it hard to replace heat source.

Therefore homeowners can sell the house more expensive with a new heat pump. Another factor is replacing a new stylish floor tile which can have fascinating effect on buyers. In addition, keeping building in appropriate situation can affect the value of the house. As a case in point, good situation of façade of the building like painting which can attract more people.

Besides that, the number of rooms and bedrooms have been always important, so it has to be considered during renovation actions that most of home customers prefer to buy a house with more bedrooms. And it is important to keep bedrooms during renovation. The least valuable renovation is installing fire place which can raise the price of the house slightly.

[Polarpumpen, 2016]

4. Analysis and Result

The analyses for this study and the result will be presented in this chapter. These analysis address the research question and will describe whether deep renovation can increase property value. It also focuses on aesthetic renovation, energy renovation and deep renovation to illustrate the degree to which it can have payback or economic benefit for homeowners or builders. This analysis will illustrate how energy classification can affect the property value as well as increment property value after renovation. Moreover, questionnaire responses will be analyzed to explore the most popular renovation which can affect the property value as well as most popular heating system among these districts.

4.1. Property value in different region in whole Kronoberg

In order to investigate estimation of the property value in whole Kronoberg, all 50 detached houses have been categorised by the name of the district, dividing to 13 groups. These groups are including Alvesta in Kronoberg as well as 12 major districts in the city of Växjö, including Teleborg, Öster, Högstorp, Östra Lugnet, Hovshaga, Arabi, Hov, Norra Växjö, South, West Växjö, Kalvsvik and Öjaby.

The results illustrates in figure 3, compares the values (in average) of regions in data collection as sample. This chart shows that how the position of a region and the access to facilities and services can influence the respective value.

Figure 3. Comparison of property value in different region in whole Kronoberg

4.2. Property value, aesthetic and deep renovation

In Figure 4, by classifying the renovation in three categories we consider the average of the values (krone per square meter, kr/m²) for each one to see how the type of renovation effects on the values. I this category, aesthetic renovation is allocated to renovation of kitchen, bathroom wallpaper, painting and some indoor changes.

Figure 4. Classification of renovation and property value

0 5000 10000 15000 20000 25000 30000 35000

Property value in average for each zone (kr/m²)

16000 17000 18000 19000 20000 21000 22000

Buildings with Aesthetic Renovation

Buildings with Energy Renovation

Buildings with Deep Renovation

Buildings with No Renovation

Property Value in Average (kr/m²) in 2019

Based on the Figure 4, we see that aesthetic renovation and deep renovation provides a raise in value; moreover, it shows that “well looking” is relatively more important and people may spend easily more money for aesthetic renovation. Further, the average value for the energy renovation is much less than the average value of the list of properties.

Energy renovation in figure 4, 5 have been considered buildings which have had some energy renovation like changing heating system or insulation of wall or attic. In this regards, deep renovation have been considered all type of energy measurement like façade, roof, windows, doors, sewage as well as heating system and insulation.

4.3. Highest and lowest zones and property value for different renovation

.

Figure 5. Comparing highest price (Öster) and lowest (Alvesta)

Figure 5 represents the statistics for Öster and Alvesta as the cities with the highest and the lowest values (kr/m²) for the properties which arise from Figure 3. This chart also compares the values with respect to the typical renovations and the average value in such cities. It can be seen that, although both Öster and Alvesta have had deep and aesthetic renovation, but Öster is located in the city of Växjö which is bigger and more equipped than Alvesta which can significantly affect the property value.

4.4. Property value and energy class

In Figure 6 data have been analysed depend on energy classification in each houses. As it explained in chapter 2, the vast majority of old buildings have energy class E, F or G. In contrast with new houses which have energy class C or some renovated building with energy class D. This figure shows the influence of the energy class on the prices of the houses and property value.

1 As a remark for figure 4, both classification highest and lowest are obtained from figure 3. In this figure, Östra Lugnet and South Växjö show the highest prices but because of the limit data from that group, Öster which has third highest price in this figure, have been considered as a higher price.

0 5000 10000 15000 20000 25000 30000 35000

Buildings with Aesthetic Renovation

Buildings with Energy Renovation

Buildings with Deep Renovation

Average in zone

Comparing highest and lowest Zones (Öster & Alvesta)

Öster Alvesta

Figure 6. Relation between property value and energy class

Based on this Figure, the energy class C makes the most impact on the property value which is also reasonable.

4.5. Property value and the number of rooms

Figure 8 shows the impact of the number of rooms on the price of houses. Based on the figure prices with the number of rooms between 3 and 11 are almost the same.

Figure 7. Relation between property value and the number of rooms

2 As a remark for figure 9, column 8 is obtained by the data from only one place and it cannot be trusted.

So, this column can be easily ignored in any further analysis.

Number of rooms 0

10000 20000 30000 40000

1 2 3 4 5 6 7 8 9 10

Relation of value and the number of rooms

Number of rooms Value in average (kr/m²) 18000

18500 19000 19500 20000 20500 21000 21500 22000 22500 23000 23500

C D E,F,G

Property value depening on energy class

(kr/m²)

4.6. Important renovations by items

Figure 9 illustrates that which part of a house is important for the people to be renovated based of which kitchen is the most favourite part for the renovation

Figure 8. Distribution of different renovation by items

This chart also shows that the renovation of bathroom is the second most important renovation.

4.7. Statistical Analysis for different kind of renovation

Statistical description was carried out for each group of renovation including buildings with aesthetic renovation, energy renovation, deep renovation and no renovation.

Table 1: Statistical analysis for different kind of renovation Statistics

Description

Aesthetic renovation (kr/m2)

Energy renovation (kr/m2)

Deep renovation (kr/m²)

No renovation (kr/m2)

Mean Value 21050 18947.2 20572 17729

Minimum 12128 13591 11538 11775

Maximum 35546 29421 28320 22794

Standard Deviation 6584 4529 7966 4594

Sample Variance 43356974 20511836 63469089 21107582

4.8. The result of data analysis in comparison with questionnaire

This questionnaire carried out to understand importance of different renovation in people idea. In this questionnaire, different type of renovation in buildings have been categorised with point in order to identify which renovation are the most important for home buyer.

0 2 4 6 8 10 12 14 16

Kitchen Bathroom Heating system

Floor tile Roof Facade Window Fire place Bedroom

Renovation with items (from 50 places)

Figure 9. Percentage of popular renovation in people point of view

The result from questionnaire in Figure 10 which have been asked from 37 people in Kronoberg County along with the result originated from data collection in Figure 9 reveals that renovation of kitchen and bathroom are the most important renovations for people who want to buy a new house or home owners. It can be seen that energy renovation is not in priority for people in this area. Moreover, according to data from questionnaire, the vast majority of the people mentioned that district heating as heating system in their current buildings. Therefore, comparing the result of both data and questionnaire shows that the aesthetic renovation is the most popular renovation for the Swedish citizens and it may refer to this fact that the most people are thoughtful about aesthetic.

4.9. Interpretation of barriers and challenges regarding deep renovation

There are several challenges which inhibit the expansion of deep renovation measurements.

One of the most important challenges toward renovation is adoption of this important measurement by general public. There have been always obstacle to motivate people to take measure for new changes due to the lack of knowledge toward that. [Klöckner, 2013]

Another considerable challenge is financial investment which concludes wide range of actions are taken with the aim of energy efficiency upgrading. This, includes changes in substitute efficient attic insulation, heating system, ventilation, air-conditioning and upgrading windows all of which require large quantity of money and homeowners may cannot afford to conduct them. Moreover, physical aspect of building can be viewed as a kind of barrier when for example a new insulation have to be match with special material or new technical solution need to be implemented. Another impediment can be unreliable data about previous energy efficiency measurements which affect the home owner’s decision regarding renovation. [Klöckner & Nayum, 2017]

There are plenty of barriers in terms of implementation of energy efficiency measurements.

According to Palm, (2018), these challenges can be classified to technical and

Kitchen 14%

Bathroom 13%

Heating 13%

Floor Tile 7%

Roof 12%

Façade 12%

Window 12%

Fire place 8%

Bedroom 9%

THE MOST POPULAR RENOVATION IN PEOPLE POINT OF VIEW (2019)

organisational barriers, institutional or structural barriers, financial barriers, market failures, organizational failures each of which limit energy efficiency renovation. As a case in point, there have been some renovation which have met the comfort standards but have not fulfilled the possible energy saving. [Palm & Reindl, 2018] One of the challenges also can be market acceptance by people, in which Actors or organizations in the market have to raise the quality of the information. This information in data center have to be cost effective and be updated associated with reality as well as benefit in order to be admitted by the market. In other word, the information not only need to be improved, also is needed to be feasible by introducing information by tools or different practical videos and technics.

To decrease the risk, determining the interlinkages between information and the factors can be affected by this data is important. Nevertheless, it is the responsibility of property owners to take the decision to fulfill renovation. The third risk is associated with governmental decision which is not cover long term strategies. In other words, governmental policies have to take into account a wide range of information which achieve with long time effort and human works. Therefore, long term investigation should be taken to prevent market failure by market players especially regarding renovation of building base on energy efficiency which there is urgent measurement are needed. [The National Board of Housing, 2015]

Therefore, adoption of these renovation measurements especially in deep renovation regarding energy as well as inappropriate knowledge of home owners about energy audit and deep renovation can be viewed as two of the most important challenges which can affect the market price.

5. Discussion and Conclusion

The analysis of the study from our sample indicates that both aesthetic renovation and deep renovation increase the value of the houses. Although energy renovation especially deep renovation is needed for most of the building in this area due to the age of the building, this renovation seems that is not priority for home owners. It can be identified from both data and literature review that aesthetic renovation associated with indoor comfort including kitchen and bathroom are more important for buyers than deep renovation regarding energy efficiency. In other words, buyers are ready to pay more money for the house which looks more beautiful in façade, wall paper, painting as well as more comfortable kitchen. On the other hand, home owners whose houses look old, prefer to have aesthetic measurement in order to increase the value of their house and they can sell it with higher price.

One the other hand, from the data for these 50 houses with differenmt energy class, can identified that property value of houses with energy class C is more than houses with energy class F, E and G. In classification of the energy, energy class C is one of the best in energy classification and has appropriate energy performance. As it can be seen from figure 3, deep energy renovation increase the property value of the houses compare the no renovation buildings. Therefore, it can be concluded that energy renovation also can increase property value.

On top that, lack of knowledge and financial limitation affect the home owner decision and inhibit investment toward upgrading heating system and energy renovation. Despite the

fact that, specific type of energy efficiency upgrade can decrease the energy consumption and increase the property value as well as environmentally friendly aspect. Regarding the property value depends on the number of rooms, it can be identified that the average of prices (in kr/m2) for the places with 4 to 10 rooms are almost close together. Therefore, according to figure 8 by ignoring the column 8, the value of the houses with less than 4 rooms is lower than houses with more rooms.

In total, to answer the research questions, irrespective of limited data, renovation of buildings in the sample could affect the final price of the houses which can affect property value. In this regard, with comparing average price for building with deep renovation, it can be conclude that deep renovation increase the properly value, but less people prefer to go through this renovation.

6. Recommendation

Due to the fact that implementation of energy saving measurement can decrease the use of energy in building, financial support or intensives is needed by government to motivate people to enhance energy saving achievement. Moreover, they have be informed about the value of the houses and market price after energy renovation. Therefore, giving this information to homeowner and trying to promote implementation of energy renovation is crucial.

7. Further work

Related with the topic of our project we believe that providing a full access to the source of data for more than 200 houses (even more) one can use the knowledge from the statistics, more precisely, regression models, to predict some events in the next years which is obviously important to do some precautionary measures.

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Appendix A. Questionnaire and Summary of Responses

The table above indicates questions which have been mentioned in the questionnaire, the percentages of the result and the number of people who responded to the questionnaire as well as some comments regarding to each part. This questionnaire are done by people who were from City of the Växjö.

(Spring 2018 City: Växjö)

Results Number of

Responses

Comments

1 which renovations are most important? Please give a rank from 1 until Max 10 for each of them.

Kitchen Bathroom Heating system Stylish floor tile Roof

Facade Window Fire place Bedroom

34

2

How do you see the importance of new heating system when you want to buy a new house?

It is necessary I will change heating system myself

I do not buy a house with old energy system It is not important

34

3

Do you prefer to buy a renovated building but in higher price?

Yes No

price is not important only renovated kitchen

34

I will renovate myself

4

What is the age of your current house?

>1940 1941-60 1961-80 1981-2000

<2001

34

5

4.What is heating

system (energy system) of your current house?

Ground source heat pump Air-source heat pump

District heating Wood pellet boiler

Electric heating Wood boiler

Fireplace Other

34

6

When you want to buy a new house what is your feeling about renovation in general.

Please give a rank from 1 to 10.

34

Faculty of Technology 351 95 Växjö, Sweden

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