Energy-inefficient homes, including those heated by oil and gas, are decreasing in value in Germany as electric home heating becomes the new standard.
With unrenovated homes and apartments already cheaper to buy than energy-efficient properties—and the price gap expected to widen—location is no longer everything in the real estate market, writes German news outlet Der Spiegel.
Home buyers increasingly treat building efficiency and age as a crucial indicator of value, said Oliver Adler, a real estate expert at Bausparkasse Schwäbisch Hall. Low-efficiency properties could lose 20 to 30% of their value in the “medium to long term.”
Germany is pursuing aggressive measures to decarbonize its housing stock. In Mannheim, the local gas network could shutter by 2035, Der Spiegel writes. The pressure to decarbonize new housing and retrofit old stock brings a cost that will only increase.
As fossil fuel-heated homes become obsolete, they could become stranded assets—investments that can no longer be liquidated, losing owners money, said Mark Carney, United Nations special envoy on climate action and finance, who previously served as governor of the Bank of England and the Bank of Canada.
“There will be a tail of stranded assets … which are going to have to turn over and be refurbished, if possible, or knocked down and repurposed,” Carney told a recent media conference in London, England. He also warned politicians and investors about the risks of building new gas infrastructure.
Canada shouldn’t be far behind Germany as it works to meet its own climate targets. Shifting the entire housing market from gas to electric heating and cooling is the cheapest, cleanest move for a comprehensive energy transition, the Canadian Climate Institute (CCI) found in a 2024 report. As fewer homes use gas, the rising costs of maintaining gas heating utilities could be borne by a smaller number of remaining users. High projected maintenance costs makes them a less attractive deal for developers.
Tenants in aging gas-heated buildings also suffer the costs of energy inefficiency, from high bills to drafts, but have little power to change their conditions. Old purpose-built rental buildings will require retrofits, but new buildings have a chance to build efficiently the first time.
“We need to be thinking very carefully about whether [new gas infrastructure] is going to be used and useful over its lifetime,” said CCI Senior Research Director Jason Dion in a media briefing last June.
