France's new DPE rating system, based on the worst energy or emissions performance, has significantly influenced property prices and climate policy.
DPE rating system changed in 2021
Since 2021, the final rating of the energy performance diagnosis (DPE) in France is determined by the worse of two sub-ratings: primary energy consumption and greenhouse gas (GHG) emissions. This created a "double threshold" system, where the overall rating depends on whichever of the two sub-ratings is lower.Buyers focus on final DPE rating
Research shows that real estate buyers in France mainly rely on the final DPE rating rather than the detailed sub-ratings. This has led to threshold effects, where small changes in the rating can cause significant differences in property prices. For example, properties rated just above the D-E threshold sell for up to 3.5% less than those just below the threshold.GHG emissions now affect property prices
The new system means that properties with higher GHG emissions, even if their energy consumption is good, can receive a lower overall DPE rating. This has made GHG emissions an indirect factor in property pricing, turning the DPE into a low-cost climate policy tool that doesn’t require subsidies or taxes.New DPE format affects 15% of sales
Since the 2021 reform, 15% of houses sold with the new DPE format received a final rating lower than their energy consumption sub-rating. This suggests that buyers are adjusting their behavior in response to the new rating system, even though they still focus on the final rating rather than the detailed diagnosis.Electricity use penalty reduced
The DPE calculation now uses a reduced coefficient for electricity, reflecting the fact that France’s electricity grid is becoming less carbon-intensive. This change lowers the penalty for properties heated with electricity, which are currently less emitting compared to other heating sources.Limitations of the new DPE system
The impact of the new DPE system may weaken if buyers become more informed and look beyond the final rating. Additionally, improvements in insulation that reduce energy use but not GHG emissions may no longer lead to higher property prices. There is also concern about potential manipulation, as DPE diagnostics are often clustered just above rating thresholds, possibly indicating strategic behavior by sellers or assessors.
