Heating costs and rent - How efficient if the Austria rental housing market?

In this paper we investigate the relationship between heating costs and rent in the Austrian rental housing market. More specifically, we test the hypothesis derivable from basic economic considerations that housing units with lower heating costs are more attractive and can therefore generate higher rents. In order to control for other characteristics of the housing units, we use a hedonic price approach including all available information as explanatory variables. The paper extends an earlier analysis for the years 2006 and 2007. In the current paper additionally data for the years 2008 to 2010 are used, allowing for comparison over time. The analysis is important for policy considerations. If the Austrian rental housing market lacks the expected negative relation between heating costs and rent, as our earlier analysis suggests, the market also lacks an incentive for landlords to invest into the energy efficiency of their buildings.