Transport overhaul set to fuel demand for outer-ring suburbs
Ask any property investment expert and they will tell you how important infrastructure is when it comes to property value. In Melbourne it is no longer just Crown Casino upping the ante, but the Napthine Government, as the city becomes a leader in rail and transport infrastructure
They’re calling it a $100m transport revolution – a Labor-backed plan by the Napthine Government to cap maximum daily fares at the Zone 1 rate across Melbourne’s entire tram, rail and bus network from the start of the year.
The plan, which would also see CBD and Docklands
trams become free of charge, was recently announced ahead of the upcoming Federal Budget release. The transport overhaul, expected to be carried out regardless of the current government’s longevity, means commuters from Melbourne’s outer suburbs could save up to $1,200 per year.
According to Real Estate Institute of Victoria CEO Enzo Raimondo, improving the accessibility and affordability of public transport is considered beneficial for home buyers and residents and is likely to have a positive impact on the property market in Melbourne.
Potential growth areas
Those keen to invest their dollars in the Melbourne market should also keep an eye on the suburbs of Brunswick (Jewell Station), Hampton and Alphington.
The suburbs have been identified as potential growth areas due to a recent announcement that government-owned transport authority VicTrack has selected the sites as part of a $1bn direct investment in the Station Precinct Enhancement Program.
The VicTrack program aims to make use of underutilised government land to significantly improve railway stations, along with providing a mix of housing, retail, commercial and public spaces for the surrounding communities.
Raimondo says he expects the program to deliver a number of new development sites, which would most likely lend themselves to the construction of apartments.
“The projects, which will be close to train stations, provide a point of differentiation from other developments that would be competing for tenants. One of the features that tenants look for is access to public transport, which is easily achieved by development on these sites,” he says. “Provided there is good design, especially for noise insulation, the developments could be very attractive to tenants due to their accessibility.”
The projects are expected to create more than 3,000 direct project delivery jobs, and 5,000 indirect jobs through construction. Once completed, they will also have the potential to support over 800 full-time commercial and retail jobs.
Economic modelling undertaken by MacroPlan Dimasi, has shown that the 10 sites identified for potential development will facilitate more than $1bn in investment opportunities over the next three to five years, and $5bn in economic stimulus.
Other areas identified as potential sites for the program include Essendon, Windsor, West Footscray, Collingwood, East Richmond, Ringwood and Watsonia.
Outer suburbs not forgotten
Investors keen to make the most of affordability in the outer areas of Dandenong and Gippsland should also add Dr Napthine to their Google alert, Facebook and Twitter accounts in anticipation of yet another major rail announcement.
According to the transport-focused leader, under his watch overdue upgrades to boost rail capacity on the Dandenong and Gippsland lines will also happen within the decade, along with a rail link to Melbourne airport.
‘’Let me absolutely assure you, our government is committed to rail projects to enhance rail capacity through the centre of Melbourne, to boost rail capacity on the Dandenong line and the Gippsland line. We need it; it is essential,” he recently announced at a Property Council lunch.
Raimondo says these types of projects will benefit all home buyers – property investors and owner-occupiers.
“For investors, properties located in these identified areas are likely to be highly rentable as they are close to transport, which is a key requirement of many tenants,” he explains.
“They also lend themselves to owner-occupiers looking to break into the property market, as they may well come on to the market at a range of price points, which will lend themselves to this market.”
SUBURB TO WATCH
It started in the third quarter of last year, with values skyrocketing by 30.1% in the Geelong bayside suburb of Rippleside, and as we move through 2014 the rise continues.
However, while the appealing suburb of Rippleside can certainly hold its own in terms of amenities and location, the dramatic capital growth of the area can be mostly attributed to riding the grand coat-tails of its next-door neighbour, Drumcondra. One suburb over, the median house price in Drumcondra is $710,000 – but, realistically, finding a home priced under $1m takes some hunting.
According to local real estate agents, the rising value of this affluent suburb is creating a gold mine for investors quick enough to get in before the price tag of Rippleside moves in line to keep up with the Joneses.
Elie Freijah, director of Barry Plant Geelong, advises investors to get in before it’s too late.
“It’s absolute waterfront, tranquil and mixed with character period homes and new contemporary developments,” he says. “It’s a lovely suburb and, so far, still affordable.”
Freijah explains that while demand has always existed in the area, with values at $1m and up next door, Rippleside is now the next best option for those who want a waterfront lifestyle but cannot afford a million-dollar price tag.
“When you consider prices around the country for waterfront or water-adjacent suburbs, this has got to be some of the most affordable property in the country.”
Sales enquiries are high and properties on the market have a short turnaround. The only demand stronger than sales in Rippleside exists within the rental market. “The rental market sees even higher demand because those who can’t afford to buy here can still find a beautiful rental,” Freijah says.
The area is also adjacent to public transport, with a rail line direct to the Melbourne CBD – the trip takes less than an hour.
According to RP Data, the median house price in Rippleside is $552,500, with a gross rental yield of 4%; and 12-month growth is at 31%.
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