Despite the perception that infrastructure improvements drive capital growth, a Sydney-based buyer's agent has warned that an upcoming project could negatively impact property values across many suburbs.
Uncertainty around the NSW Government’s WestConnex project could start to have a detrimental effect on the inner-west property market, according to Veronica Morgan, principal of Good Deeds Property Buyers.
The WestConnect project involves the compulsory acquisition of properties in the inner west, including St Peters and Haberfield, as well as the establishment of ventilation stacks above the tunnel’s course.
“People in Haberfield have had this cloud hanging over them for years in terms of where the stacks are going to be,” Ms Morgan told Smart Property Investment. “The general lack of certainty and the general bewilderment has not been good in certain areas.
“There are certain suburbs that are definitely affected and people are looking at them with deep suspicion when they’re buying – definitely Haberfield and obviously St Peters as well.”
Ms Morgan cited anecdotal evidence from buyers who had been caught out by compulsory acquisitions despite practicing due diligence. She said this process will have continuing implications for investors in the area.
“The main issue we see is that as a property buyer, your property might be earmarked for compulsory acquisition. Obviously there are zoning documents, for example, that are meant to give you advanced notice of this, but we keep hearing anecdotal stories of people who got caught out.
“So the due diligence you have to go through is quite intense and you have to double- and triple-check your property.”
Uncertainties around the project will make it hard for investors to make informed decisions in the region, she said.
“There are whole areas where we could advise buyers to proceed with caution,” Ms Morgan. “There are streets we wouldn’t buy in.
“While there are certain streets that will be affected, there are streets we have to be very, very careful about buying in. At the same time, it’s hard to advise people because it has been going on a long time and there’s been very little clarity and very little certainty.”
Even if an investor’s property isn’t tagged for demolition, Mr Morgan said the environmental ramifications of an infrastructure project like WestConnex can be detrimental to property values.
“There’s noise pollution, air pollution and general loss of beautification for those properties that aren’t acquired but are close to the entries and exits. and also any exhaust stacks.
“So even if your property isn’t compulsorily acquired, you could be negatively impacted by the project if it goes ahead.”
Despite her concerns, Ms Morgan said it was unrealistic to warn buyers off entire suburbs – particularly when the inner-city market has been recording such high capital growth.
“Be mindful that things can change and I wouldn’t say avoid the whole suburb by any stretch,” she said.
Buyers in Melbourne’s inner-north faced similar circumstances in the lead up to Victoria’s state election last year, with the fate of the East-West Link dependent upon the election’s outcome.
The election of a Labor government in Victoria has resulted in the project’s termination, with the final details of the contract cancellation announced last week.