Fracking may cut house prices 7% - but it will boost renting
07-06-2015
Fracking could reduce house prices by as much as seven per cent and make homes harder to sell because of traffic and noise issues - but it could also boost rental markets, according to a draft official report.
The government has been obliged to release the report to the public after a decision by the Information Commissioner's Office, an official data watchdog.
The part of the report relating to economic impacts on communities contains these statements:
“As operations expand and new workers arrive into rural locations there may be a modest increase in demand for accommodation that could raise rents and cause affordability issues for rural residents seeking accommodation. For example, the [fracking specialist company] Cuadrilla research quotes a figure of 83 [full-time] jobs being created on average for each drilled well in the UK, of which a percentage may seek accommodation in rural areas.”
However, there is bad news for the sales market:
“Residents owning property close to the drilling site may suffer from lower resale prices due to the negative perception being located near the facility and potential risks. However, these effects will depend on a range of wider factors that influence rents and house prices such as planning policy, growth and investment from wider sectors, schools, flooding and insurance etc.”
The report draws on evidence collected in Texas in 2010 which showed that houses valued at more than $250,000 and within 1,000 feet of a well site saw their values decrease by three to 14 percent. Other evidence from Alberta in Canada found a reduction in house prices of four to seven within four kilometres of fracking wells.
The draft report released by the UK government concludes that “overall the evidence on impact on property prices in the literature is quite thin and the results are not conclusive” but it admits that there could potentially be up to seven per cent reductions in property values within a mile of an extraction site to reflect the impacts.
Properties located within a one to five mile radius of the fracking operation may also incur an additional cost of insurance to cover losses in case of explosion on the site.
“Such an event would clearly have social impacts, although the probability is expected to be low if the regulator and company manage these risks effectively” says the report.