MYTH #6: “Fracking will not affect house prices.”
FACT: The government’s draft Shale Gas Rural Economy Impacts Paper (released July 2015) says: “House prices in close proximity to the drilling operations are likely to fall. There could be a 7% reduction in property values within one mile of an extraction site.”
The same report (the history of which you can read here) also said the following:
“Those residents owning property close to the drilling site my suffer from lower resale prices due to the negative perception being located near the facility and potential risks.”
“A study in Texas concluded that house prices valued at more than $250,000 and within 1,000 ft of a well site saw their values decrease by 3-14%.”
The conclusions of the DEFRA draft report might have underestimated the impact of fracking. In this article in the Daily Telegraph (01/05/15), entitled Fracking could wipe tens of thousands of pounds off house prices, A survey of UK estate agents in potential fracking areas showed that 67% thought that house prices would suffer. The majority of estate agents thought the loss of value would be between 10-15%, while some estimated a fall of up to 70%.
A report in the Daily Express says that fracking “could see millions of people living in and around drilling sites lose up to 30 per cent off the value of their homes.”
Research in the USA, published in the American Economic Review in December 2015, concluded that the value of homes in Pennsylvania within 1 km of fracking wells fell by 12.9%.
Perhaps the most famous example of falling house prices is this story from the Daily Mail of a woman in Lancashire saying the value of her home has been cut by £535,000, or over 70%. The reason? It was close to Cuadrilla’s proposed fracking sites on the Fylde Peninsula.
What about house insurance?
Again, it’s not good news if you live near a fracking well-site. The DEFRA draft report said: “Properties located within a 1-5 mile radius of the fracking operation may also incur an additional cost of insurance to cover losses in case of explosion on the site.”
It’s even worse if you live on a flood plain. According to an investigation by the Independent on Sunday (09/01/16), companies representing two thirds of the UK insurance market will not insure against damage caused as a result of fracking, or else have exemptions covering pollution of water from the controversial technique. The UK’s biggest domestic insurer, Direct Line, said although “subsidence and earthquake caused by fracking are covered as they are insured risks”, there is “no cover for contamination caused by fracking as contamination is a general exclusion of our policy”. And with 20% of the new PEDL fracking licence areas on flood plains, this could be a major concern for a very large number of people.
We will leave the final word to Ray Boulger, from the independent mortgage broker, John Charcol, who said in an interview with Talk Fracking: “The prospect of fracking in your area is a bit like putting a motorway or railway, like HS2, through your front garden – it’s going to have an impact on the valuation of your property.”
Still, at least you’ll be able to drink the water – or will you? Take a look at Myth #7…