Transport infrastructure and property prices: Road to Riches
By Rich Harvey, Managing Director www.propertybuyer.com.au
1. Why type of transport infrastructure projects impact
property prices the most?
The main types of transport projects that improve property prices include:
Heavy rail line (passenger and freight)
New expressways and motorways
Bus transit ways
Port facilities or expansions
Good quality transport links to the CBD and regional hubs within a metropolitan area helps improve property values for a suburb. A question regularly asked by investors is “how close is transport” or “how long to commute to the city.” With petrol prices on the rise the shift to pubic transport is likely to rise.
The London School of Economics developed a model that demonstrates that a one per cent improvement in a location's accessibility to employment opportunities results in a rise in property value of between 0.25 and 0.3 per cent. A study in Brisbane by PRD Nationwide found that suburbs with rail access increased in value around 3% more than those without rail access.
The benefits of living close to great transport links are fairly obvious:
It cuts down travel time and commuting time thereby increasing leisure and family time, it improves access to employment and amenities and generally improves the efficiency and productivity of the economy.
2. How can investors take advantage of the development
of these new projects?
For new transport infrastructure developments, we have identified that there is often a spike in property and land values in two distinct phases. First when the project is announced, it creates renewed interest in the area from investors and developers keen to get a slice of the action. Investors aim to capitilise on the “potential” of the area. The second phase is once the new transport project is in place & operational and residents and businesses experience the benefits of reduced travel time.
Property investors can take advantage of new announcements at either stage. However, its important to understand that investing on the basis of an announcement is speculative. For example, the North West rail link was announced then re-announced several times by the former NSW Government, but they did not commit to a timetable or funds. So if you had brought a property along the corridor in hope of a quick capital gain you would have been disappointed.
3. Where can investors find out more information to do their research?
Investors can source information from their local council, the Department State and Regional Development or Infrastructure. Large infrastructure projects are always reported in the media and financial press due to the economic benefits that the project brings from both construction and operational phases.
4. What are some examples of projects and what happened to
property prices in the nearby areas?
The light rail network in Sydney is being extended from the Lilyfield terminus to Dulwich Hill train station. This is likely to improve property values in the Inner West suburbs of Leichhardt, Haberfield, Lewisham, Summer Hill and Dulwich Hill. We have seen increased demand from both investors and owner occupiers in these areas in the last 12 months. When the Glebe Island bridge was completed there was a spike in property values for Balmain and Rozelle and surrounding areas.
When the M2 motorway was first completed it made travel times from the North West suburbs of Sydney much quicker (except now they are extending the road to three lanes and it’s like a car park during peak hour!). Suburbs like Baulkham Hills experienced a sharp increase in median price after it was completed.
The completion of the M7 ring road around Sydney also opened up a large number of outer west suburbs and industrial areas which has seen some appreciation in values.
In regional and coastal towns such as Bowen and Gladstone the expansion and construction of port facilities for Australia’s largest coal exports will have a dramatic impact on property values.
Propertybuyer.com.au recommends investors keep a close eye on the heavy rail projects proposed for Sydney the South-West Rail Line and the North West Metro Rail Line. And also the long awaited rail link in North Brisbane from Petrie to Kippa Ring should have a positive effect on suburbs such as Murrumba Downs, North Lakes, Mango Hill, Rothwell and Redcliffe.
Transport links are just one of many factors you need to consider as an investor.
This article was written by Rich Harvey, founder and Managing Director of propertybuyer ®, Sydney & Australia’s leading Buyers Agents. propertybuyer ® helps property investors and home buyers secure the right property at the right price, everytime. Rich was awarded the 2011 Best Property Finder, 2009 “Buyers Agent Award for Excellence” by the Real Estate Institute of Australia and the 2007 National Telstra Business Award. For further details please visit http://www.propertybuyer.com.au/ or call +61 2 9975 3311
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