What impact will the St Albans sinkhole have on property values?
- Credit: Photo provided
The spectre of having potentially lost acres of equity in their home has the capacity to leave some owners sick to the stomach with worry.
The huge sinkhole (that opened at 1.30am Thursday morning on Fontmell Close in St Albans) has led to the evacuation of many residents and left approximately 40 homes without electric, gas and water. The big question on everyone’s lips is ‘how will this impact the residents in the road?’
Besides the changes they are facing to their daily lives - and the ‘how long is a piece of string’ answer to any deadline for fixing the hole - the spectre of having potentially lost acres of equity in their home has the capacity to leave some owners sick to the stomach with worry.
Several sinkholes have carved gaping holes in the ground across the country in recent years, leaving many scratching their heads and asking questions about why houses were built on such sites in the first place.
The geological history of this part of St Albans shows that many areas in and around here were extensively used to mine sand, gravel and clay – this area notably being used for many years as a brickworks where the brick makers dug huge ‘bowls’ to mine the clay from the soil. This mining activity (which was later filled in) and land instability due to acidic groundwater eroding the limestone bedrock could be a contributing factor to the potential for more sinkholes across the Bernards Heath area including Seymour Road, Beech Road, Marshall Avenue, Watson Road and the land underneath local amenities such as The Pioneer Skate Park and two local schools.
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So, is it going to affect house prices? Well, if someone told you that a house right next door to a sinkhole will be worth the same today as it was yesterday before it appeared, would you believe them? Probably. And would you buy it? Probably not.
That’s addressed the question of perceived value; so yes – arguably there will be less buyers interested than there were before, which means that values may potentially drop on that road. The other factor to take into account however is the repair methods employed in rectifying the damage caused by a sinkhole.
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Many are fixed using foamed concrete to allow water to pass through into the limestone bedrock whilst reinstating a solid foundation for construction of buildings, roads and infrastructure on top. This is the method that was used in Hemel Hempstead last year.
The problem seems to be that nobody really knows where the eroded caves in the bedrock actually are, and therefore we have no current method of predicting where the next sinkhole will appear.
This sounds like scaremongering; and although there have been incidents in which properties in the area have suffered from subsidence (and indeed one sinkhole opened up behind the Pioneer Club which has been monitored by the council for some time) the probability of another sinkhole opening up right underneath your house or your child’s school is low. Many of these buildings have been here for quite some time without any major incident.
The best and most recent case study of how this geological nightmare can impact on housing is with the sinkhole from February 2014 underneath Oatridge Close in Hemel Hempstead. In March, a local agent was selling a 4 bed property on that road just feet from the hole for £420,000 which is in line with asking prices at the time. Encouragingly, sales haven’t slowed down by a huge amount, and the prices seem to have retained a somewhat positive trend, which contrasts the expectation that suddenly all prices on that road would plummet into the hole as well. The biggest factor to bear is ensuring that any remedial works and geological surveys are carried out and the paperwork is retained by the owners to pass on to buyers in the interests of transparency and cementing trust.
Some properties on the site did require demolition and have been replaced by town houses on newly replaced foundations.
All of this does raise the question of whether issues that have a geological or structural impact, whether a present factor or a calculated risk, have as much of an impact as social problems such as poor schools, high crime rates and lack of community – it seems that the latter drag prices down at a much higher rate than the former.
Roundly speaking, homes directly on the rim of the crater may experience some depreciation, but on the whole the impact will be minor due to the huge demand for St Albans property and the massive national demand for housing. Owners should be sure that buyers are confident in the steps that will have been taken to rectify the problem, and that some assurance can be given to them on ensuring the property is not at risk. The best way to do this is through producing paperwork from the council and specialist contractors concerning the work undertaken to plug the hole.
Undoubtedly, some buyers will run a mile, but in a market where demand outstrips supply to such a degree that open days can attract tens of buyers, an up-front approach and a realistic but keen price will see vendors walking away without too much of a limp.