The law now rules out compensation unless the owner’s block – defined as being from the soil up – is impinged upon by construction.

That should change as the government unveils a range of infrastructure projects, argues a former commissioner of the Land and Environment Court, Professor John Sheehan of the University of Technology, Sydney.

"The government is moving towards [tunnelling] because of the high value of land in Sydney," he said. "The cost of compensation at the surface would be significant but private landowners are cross-funding [tunnels]."

Professor Sheehan said even the value of homes far above tunnels could be affected.

"Perceptions are important in the property market," he said, drawing an analogy to home buyers’ well-noted aversion to power lines.

David Blackwell, the head of valuation at Urbis, a consultancy, agrees tunnels could reduce a home’s value.

"The residential market is sensitive to those things," he said. "It's unfair to take a generic approach and say that all properties are not affected."

Slater & Gordon head of property practice Vincent Butcher said he represented clients whose homes were affected by tunnel projects despite not lying directly in their path.

"We have a [NSW] client who has an exit tunnel three metres from their fence: they’re not protected under the act," he said. "The government will not come to a landowner [offering compensation]: they will only do what the law tells them to."

The Victorian government said it could pay compensation to about 250 homeowners whose properties would be tunnelled under for an $8 billion tunnel announced last year.

In addition to planned home acquisitions worth $500 million for the light rail and north-west rail link, the NSW state government is also funding a study into a tunnel on the northern beaches.

"The existence of a tunnel beneath a property does not impact upon the owners' right and ability to sell the property on the open market," a spokeswoman for Transport NSW said.