Wednesday, 30 November 2011

API Blog :: Have your say!


API Blog :: Have your say!

November 15, 2011

Transport infrastructure and property prices: the road to riches

Filed under: General by admin at 2:05 pm — Tags: ;
As a property investor you should be continually scouring the market looking for new opportunities and trends that will affect the demand for property.

BY RICH HARVEY
New and improved transport infrastructure can have a dramatic effect on property prices. On one hand you want be close to transport… but not so close that road noise decimates the peaceful tranquility of outdoor living!

1. What type of transport infrastructure projects impact property prices the most?
The main types of transport projects that improve property prices include:
• Light rail
• Heavy rail line (passenger and freight)
• Bridges
• 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 help to improve property values for a suburb. Question regularly asked by investors are “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 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 PRDnationwide found that suburbs with rail access increased in value by around three per cent 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’s often a spike in property and land values in two distinct phases. The first is 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 capitalise on the ‘potential’ of the area. The second phase is once the new transport project is in place and 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 and then re-announced several times by the former New South Wales Government, but they didn’t commit to a timetable or funds. So if you had brought a property along the corridor in the 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 of State and Regional Development or the Department of Infrastructure in the relevant state. 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’ve 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 in Sydney was first completed it made travel times from the northwest suburbs of Sydney much quicker (except now they’re extending the road to three lanes and it’s like a car park during peak hour!). Suburbs such as 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 in Queensland the expansion and construction of port facilities for Australia’s largest coal exports will have a dramatic impact on property values.
Investors should keep a close eye on the heavy rail projects proposed for Sydney – the South West rail line and the North West Metro rail line. 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.
Remember, transport links are just one of many factors you need to consider as an investor.
Rich Harvey is a buyers agent, economist and CEO of propertybuyer ®. Rich was awarded the 2009 national “Buyers Agent of the Year”, the “Award for Excellence” 2004-2008 by the REINSW and the 2007 National Telstra Business Award. Find your next property faster: http://www.propertybuyer.com.au
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