The introduction of environmental legislation in many western countries has brought contaminated land issues to the attention of both property valuers and investors. The identification of the correct approaches to use in the valuation of property affected by contamination is of great interest, not only to the valuation profession, but also to the stakeholders (the developers, owners and lenders) of contaminated land.
These parties wish to know the magnitude and duration of the impact of contamination on property values, both before and after remediation. However, uncertainty exists as to how to measure the impact, and the appropriate way to account for it. Previous research (Kinnard, Worzala, Bond & Kennedy, 1999) indicates that the correct approach to take in valuing contaminated land is to value the land unimpaired then deduct the associated costs of remediation, including an additional allowance for post-remediation "stigma" .
However, the research showed that the estimation of "stigma" is one of the more complex issues in the valuation process. This paper summarises the results from a study consisting of two parallel efforts: firstly, an analysis of post-remediated vacant residential land sales to determine the effect, if any, of a site's soil contamination history on property prices. Secondly, to supplement these findings, a study of the attitudes and reactions of property owners toward living on a previously contaminated site.
The latter study served as an important check against the sales analysis study. Multiple regression analysis was performed on the vacant residential land sales along the Swan River, in Perth Western Australia, from 1992-1998 to estimate the affect of the contaminated land history on residential property prices. A survey was conducted to identify the issues and to determine the attributes considered important in residents' purchasing behaviour.
The results from both studies show that while a site's contamination history impacts negatively on property prices, the price decreases are compensated by the positive influence on price from the additional facilities and amenities provided in the case study neighbourhood.
