Is a fall in Property Values a Social Impact?
One of the key issues that upsets people when development proposals are made is the potential impact on property values. Regardless of the general rising trend in property values (in the long term of course, not recently), many people are convinced that a development proposal will ruin their property values and hence destroy their financial security. Why is this? And if it is a serious issue, why is it not a consideration in urban planning?

When planning new developments, particularly of infrastructure, the potential impact on property values is not considered to be a relevant planning consideration (in Australia anyway). There are a number of reasons for this, which include:
- The uncertainty of the exact impact – will the proposed development increase or decrease the other property’s value over time? What happens if it actually adds value to a property – should the landowner pay a betterment tax to the developer?
- If the development is of community infrastructure, then there is an argument that the broader social good is more important than the localised negative impact (more about this in another post sometime).

Property values are highly subjective. One man’s mansion is another man’s doghouse. People consider a wide range of issues when deciding how much they will pay for a particular property. The article below has some classic examples of the trade-offs people are prepared to make in home purpose decisions.

The Unfortunate Location – The New York Times
http://www.nytimes.com/2009/06/18/garden/18houses.html?pagewanted=1&_r=1&ref=style

Generally there will always be people who are willing to buy a property in a poor location if there is a financial trade-off. This of course is the crux of the issue for someone who loses believes they have lost value on their home. However, if you were to look at the value of a property over an extended period, you would almost always find that the value had increased. As with almost any asset, it’s the point at which you buy and sell that makes the difference. Once a new infrastructure element is in place, and people have become habituated to it, it becomes part of the background and its negative impacts on property values decreases.

This of course is no consolation for someone who can demonstrate a loss in value. This has happened on a few projects I have worked on. In one case, a couple had their house on the market, and a purchaser had made a firm offer for the property. The following day the purchaser learned of the infrastructure proposal (which was actually going to be several kilometres away and barely visible from the property in question). They withdrew their offer. The following day they made a second offer which was a few tens of thousands less than the original offer. When I spoke with the vendors they were quite distraught over the whole incident. I personally would have told the potential purchasers that they were unethical ratbags and I wouldn’t sell them a lollipop, but the vendors had other reasons for needing to sell the property.

This impact on people’s perception of property values is usually most acutely felt at the planning stages. It comes about from the uncertainty caused by the proposal, when people can’t visualise what it will look like and what impact it will have on their daily lives. The general response is to assume the maximum negative impact. As I mentioned earlier, once the construction period is over and people can clearly see what the actual impact is – and see the benefits of the infrastructure – property values stabilise.

The impact on property values caused by some major development proposals is a significant social impact, even though it is generally short-lived. The emotional stress that some local communities experience is quite considerable. Individuals have reported significant physical and mental health impacts, marriage breakdowns, job losses and their children being affected (usually from being required to move).

For those of us who work in these kinds of planning studies, this means that managing expectations through the planning and construction phases of a project is vital to minimise the negative impacts for local communities.

One of the reasons that local communities object to major development proposals is very rarely addressed in planning systems. This is the issue of what is the limit of acceptable change in a specific locale. In general, when people protest about a proposal it is because they believe that the amount of change being imposed upon them is unacceptable. Gradual, incremental change is generally more acceptable to communities than sudden, major change, hence the opposition to large projects.

The level of change that specific proposals will bring to a community should be assessed, including in terms of surroundings, amenity, traffic and social change. These impacts should be clearly documented in an impact statement which draws together all of the assessment undertaken for the proposed development, and which undertakes further social impact assessment as necessary. Only larger scale developments would need to be assessed in this way, however locailities which are expected to experience significant incremental change should have an initial assessment of the acceptability of that change undertaken.

The affected community could then be consulted on the basis of whether this change is acceptable or not. This should be an iterative process, that is to say, the proposal would be amended based on the outcomes of the impact assessment, if it were determined to have an unacceptable impact in one or more areas.

What is social planning? Well it's not party planning! It's a specialty within urban planning. Social planners are focussed on the social elements of planning, just as transport planners focus on transport and statutory planners focus on the rules and regulations.

I've been a social planner for several years now. To me, understanding how development will affect individuals and society is the most important element of planning. It shouldn't be about maximising land value or economic outcomes, but about achieving our social aspirations.

I'm going to use this blog to express my ideas around social planning, link to useful information and in general work through my original question of what is social planning.