If a council turns a resident's house into apartments, or the state government builds a highway through it, they must pay the resident for their loss.

But those who live next door confront a different story, and could have to fight even for inadequate compensation.

One of Australia's foremost experts on property rights argues that and more should change in an urgent review of the way all levels of government compensate homeowners who live near infrastructure projects.

"There is a reluctance in any [state government to compensate] property owners adversely impacted by public infrastructure, unless a piece of their land is actually acquired," argues Professor John Sheehan, from the University of Technology Sydney's Asia Pacific Centre for Complex Real Property Rights. "Land owners are losing value through this unfairness in the law." Local governments are likely to increasingly need to use their compulsory acquisition power to find space for infrastructure projects, recent research also from UTS has found.

Under current laws, unless the boundaries of a property are directly impinged by a project, governments are not obliged to offer compensation and homeowners often have to make their own case for a payment. Professor Sheehan, who is a former Land and Environment Court commissioner, says it is time for an urgent review of those laws to better protect homeowners.

He says the case of a new high-speed train route through central England is an example of a fairer approach. The UK government is planning to buy out and compensate not just owners whose properties lie in the path of the new Midlands to London HS2 train – but also those up to 120 metres of the tracks and whose homes might be "blighted" by noise.

"The impact on property values can extend well beyond the boundaries of an infrastructure project," he said.

Tunnels provide another interesting example of the limits of compensation. They can lie between tens and hundreds of metres below or beside homes and the state government argues they do not affect an owner's ability to sell. The state government is currently embarking on a number of major tunnelling projects, such as for the North West Metro, and the NorthConnex and WestConnex motorways.

In a recent review submission, the Australian Property Institute argued buyers are often less willing to buy homes above tunnels.

"A perception in the marketplace is nevertheless real," the API said.