Infrastructure spending ramps up
Despite not having the scale of mining-related infrastructure projects, Victoria’s impressive collection of road and rail infrastructure projects are now making up for the shortfall
An economy that is heavily reliant on manufacturing does have a few downsides, especially during an economic slowdown. But now it seems the tables are turning in Victoria and the government’s aggressive stance on infrastructure spending could be just the ticket back to the top of the economic leader board.
While WA and Queensland have enjoyed the enviable economic benefits of resource-related investments in recent years, they have had to deal with the inevitable fallout of the softening industry and the completion of these projects.
“Victoria did not see the surge in resource-related construction or the associated upshot in economic growth that occurred in the resource-rich states in recent years. But having less exposure to the upside also means less exposure to the inevitable downside,” says the latest Deloitte Access Economics report.
“With the impressive collection of road and rail infrastructure projects to call its own, Victoria’s engineering construction sector is set to make back some lost ground on the likes of WA and Queensland.”
The ABS reports that the total value of work done on Victorian railways, bridges, and harbours has surged by almost a third in 2013. Deloitte says much of that work has related to part of the $5.3bn Regional Rail Link project from West Werribee
to Melbourne’s Southern Cross Station, the largest discrete rail project currently underway in Australia.
Dennis Napthine’s government has promised $27bn worth of infrastructure spending, which includes $11bn for the new Melbourne city rail links.
The links will comprise new underground stations at Fishermans Bend and Domain, two 7.5km tunnels from Southern Cross to South Yarra, with new underground platforms, and the rail link to Melbourne Airport. Operations are planned to begin in 2023.
“It [the Melbourne Rail Link] will deliver a reliable, convenient and efficient rail link to Melbourne Airport, with services every 10 minutes during the day, to support massive growth in the number of passengers travelling to and from the airport,” says Napthine.
The infrastructure projects are expected to create thousands of jobs, including 3,700 from the Melbourne Rail Link, 3,000 from the western section of the East-West Link and 700 from the project to widen the CityLink tollway.
Suburb to watch
A quick glance at the amenities at Elsternwick and you will see why many residents describe it as “a suburb that has it all”. Firstly, it is only 9km from the Melbourne CBD and minutes from St Kilda and the beach. The transport services are fantastic, as the train and tram lines can get you to the Melbourne Cricket Ground and other renowned entertainment venues within 10 minutes. Then there’s the buzzing nightlife and restaurants that make the suburb desirable for young professionals, and the diversity and quality of shops and schools that appeal to families.
There are many period homes with beautiful gardens in tree-lined streets, as well as renovation opportunities. These may be a tad pricey, but there are plenty of units that can be bought for well under $500,000. The fact that the median unit price has dropped by 4% over three years indicates that investors will have an opportunity to buy towards the bottom of the market.
As the Melbourne market continues to respond well to low interest rates, average prices should start to pick up. Indeed, units in neighbouring Caulfield South and Caulfield are much more expensive, going at $630,000 and $575,000 respectively.
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