Effects of rooftop solar on housing prices in Australia

Author name: 
Best, R
Burke, PJ
Nepal, R
Reynolds, Z

Hedonic models of housing prices face the risk of omitted variable bias due to the challenge of controlling for all relevant property attributes. The level of household financial assets is a key but underexplored control that may help to account for some of these difficult-to-observe property characteristics. Using large Australian household surveys, we find that controlling for household financial assets reduces the observed effect of having solar photovoltaic panels on housing prices. The elasticity of housing price with respect to solar capacity is 0.09 for households with solar panels. Controlling for financial assets may be of use in other studies seeking to estimate the effect of home additions on housing prices.

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