House prices

OK, we know that the planners don’t take it into account, and that it isn’t considered by the Scottish Government. I wonder what the economists make of it? One possible answer is in the Report on the Economic Impact of Wind Farms on Scottish Tourism commissioned by the Scottish Government (some quotes and full report available for download here). It says (more or less) this: house prices don’t matter. Those who hate it move out, those that don’t mind move in. Fall in house prices doesn’t affect economy of the area, because those who occupy the now-cheap houses have more spending power because they aren’t paying so much for their mortgage. Hmmm. Well, that’s one way of looking at it. If you don’t believe me, here’s the full text (p. 86):

“On the question of value the evidence Is more ambiguous. Clearly people state they prefer scenery without intrusions such as wind farms and when asked to compare give small but significant negative values to wind farm developments. Empirically, however, these changes are so small relative to other socio-economic factors that they often cannot be directly identified in time series studies of property values. Over time the situation is also confused by sample selection bias; those who lose most will in time move out, those who object least will move in. Probably the best approach to reveal value loss is cross-section hedonic pricing analysis. The quoted study does provide some evidence of stated values being manifest in property prices, albeit without direct reference to wind farms. In terms of economic impact, changes in property values should have no effect on expenditure in the area*. However for transient visitors we would expect a change in value to be replicated in a change in accommodation price and a small negative impact on expenditure in an area.

*The impact on spending of wealth changes is central to modern macro-economics, increases in nominal wealth do induce increases in spending. However it is equally true that a decrease in house price to a new arrival in an area will divert expenditure from mortgage payments made outside an area to expenditure within.”

For those of us who are not deeply into cross-section hedonic pricing analysis and who know that the very real fall in the value of our properties could be catastrophic at a personal level, here are some links and documents:

A research paper by George Matthews FRICS; MIFireE on house prices and how they are reduced by wind farms (Word Document downloads):

WIND FARM Evidence Property Values Reduced Jan 2013
Wind Farm Property Values Appendix 1

WIND FARM house values APPENDIX 2

A couple who have tried to sell their house for three years have sent this memo to parliament:
A landmark case has shown evidence that the close proximity of wind farms can affect house prices. A council tax appeal ruled that Jane Davis would get a discount on her council tax because her home has lost value as a result of a wind farm. This ruling could be regarded as an official admission that wind farms have a negative effect on prices.
Valuation Tribunal Council tax appeal from Jane Davis (2008)
The decisions by the Valuation Office Agency (VOA) to move certain houses close to wind farms into lower council tax bands are the first official recognition that the turbines can lower the value of nearby homes.Although property experts have long acknowledged the harmful effect of wind farms on property prices, the association has until now been dismissed by the wind industry as conjecture.In one recent case a couple saw the value of their home 650 yards from the Fullabrook wind farm near Braunton, Devon, fall from £400,000 to £300,000 according to a local agent’s estimate.The couple, who were not attempting to sell their house, told the VOA that the persistent whooshing noise caused by the turbines and the visual intrusion – including a flickering shadow when the sun is directly behind the blades – made their property less valuable.The VOA accepted their argument and agreed to move the property from council tax band F to band E, amounting to a saving of about £400 a year, the Sunday Times reported.

The RICS study in 2004 concluded that 60% of the survey sampled suggested wind farms decrease the value of residential property where the development is within view and 67% of the sample indicated that the negative impact on property prices starts when a planning application to build a wind farm is made. Impact of wind farms on the value of residential property and agricultural land – an RICS survey (2004)
Wind turbine operators say that if there is a minimum distance between turbines and dwellings-a distance of 2 km, say-there would be very few areas in the United Kingdom where turbines could be sited.

An article about a landmark ruling in Australia on land values (word document download):
Value of land cut by wind

Article in the Telegraph about a wind farm developer who has withdrawn a leaflet claiming wind turbines do not affect house prices, following a complaint to the Advertising Standards Authority: click here to read more

Part of a submission to the House of Lords: (PDF download): Davis submission – appendix – property values (see the full submission on the Noise and Health page)

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