Gulf oil spill could take 10pc off shore prices

BP's oil spill may drive down the Gulf Coast's shore-area property values by 10 per cent for at least three years, according to CoStar Group.

Losses may total US$4.3 billion ($6.2 billion) along the 966km stretch from the Louisiana bayous to Clearwater, Florida, the property-information service estimates.

"It's just another blow to an already depressed real estate market," Norm Miller, CoStar's vice-president of analytics, said yesterday.

"The best thing you can do if you're in real estate in this area is bide your time, don't panic and don't try to sell in this environment."

Falling real-estate values are one consequence of the worst environmental disaster in US history as oil keeps gushing from a BP well once pumped by the Deepwater Horizon rig.

The median US home price was US$173,100 in April, down 25 per cent from July 2006, according to the Chicago-based National Association of Realtors. Florida real estate is among the hardest hit markets, with one in every 184 households in the foreclosure pipeline, according to data company RealtyTrac.

Only Nevada and Arizona have higher rates, RealtyTrac said yesterday.

Costar made its forecast for property prices assuming a 10 per cent loss based on previous disasters, such as oil spills, hurricanes and the 1979 Three Mile Island nuclear accident in Pennsylvania, Miller said. His estimate relied on recent sales data of property within 60m of the Gulf waterfront and spanning 965km from Venice, Louisiana, to Clearwater, Florida.

The analysis valued the property at about US$43 billion for the entire coastline measured, he said.

Costar's loss estimate aligns with a projection for southern Louisiana and Mississippi property values by Arthur Sterbcow, an independent real estate broker and analyst in New Orleans.

Sterbcow forecasts values in that area will fall 5 per cent to 15 per cent in the next 12 months.

- BLOOMBERG