Fracking could lower property values by 30%
The environmentally-controversial practice of fracking to release shale gas could have another unwelcome side effect, bringing down the value of property in its vicinity by 30%, according to surveying firm e-Surv.
The government gave the green light to a fracking project in Lancashire at the end of 2012, with water and chemicals pumped underground to force shale gas out.
However, subsequent earth trmors in the area led to the project being halted.
e.surv business development director Richard Sexton said:
“Most people if they have a choice won’t live next to a mine. But there is another issue. That is called an earthquake and it is a bit more real. If you are getting tremors that might damage the property the lender is going to be worried.”
Sexton told Your Mortgage that announcements of other major projects such as the High Speed 2 rail link were followed by a depreciation of value in the areas affected.
“High Speed 2 affected prices by up to 30% for a period of time. With fracking, the fear is this could actually damage the property. But it also depends what is going on in the wider economy.”
More clarity from the government could help reduce fears and stabilise prices, he added.
The example of fracking in the United States suggests while the controversial practice may affect house prices, an influx of oil workers could also open up buy-to-let opportunities.
Buy-to-let investment opportunities in North Dakota have predicted rental returns of 13%-15% for corporate tenancies.