Areas with new infrastructure projects are one sign of a hotspot, but not all infrastructure projects are alike. One property commentator shares her picks on which areas and which projects are worth watching.
A new infrastructure project can mean job creation, which can occur before and/or after the project is completed, but knowing which projects will create jobs after is important to finding a successful hotspot; more jobs means a stronger economy, which means a better chance people will want to live in a given area.
According to Anna Porter, valuer, property commentator and CEO of Suburbanite, these are the areas seeing new infrastructure projects that are likely to increase property prices:
South Australia’s capital city is “the benchmark example” of projects that contribute to a strong property market, Ms Porter said.
“Adelaide is set to see thousands of new jobs which will underpin employment, financial security, cash flow into the economy and in turn the property market,” she said.
“The projects coming out of Adelaide are creating jobs as well as encouraging people to move to the area to set down roots, which is set to boost internal migration to the very liveable city.
“These projects such as the hospital will not only create jobs internally but there is a flow on effect to the businesses outside of the hospital such as cleaning companies, cafés, florists and the general supply chain to the hospital. This will create spending in the local economy as well and a thriving economy will result in a thriving property market.”
As an example, the $2.4 billion Royal Adelaide hospital has recently opened, which Ms Porter said is contributing to job growth in the area.
“The next major project, being the defence contract for manufacture and maintenance of military boats out of Port Adelaide will be kicking off, as well as the recent announcement by Lionsgate that they will be adding another 1,200 jobs to the former Holden site with renewed manufacturing activities in batteries and other innovative sectors,” she said.
Tasmania has had multiple project announcements made, yet few have actually started, which dampens their job creation potential.
While the island state has seen strong growth for the last two years, Ms Porter does not see fundamentals for migration and job creation, with data for the year to August 2018 showing a jobs growth of 1.06 per cent, compared to the Australian average of 2.47 per cent.
“Hobart significantly underperformed over this time and based on the research this will continue to occur into the next three to five years based on the proposed pipeline,” said Ms Porter.
Of the 10 major infrastructure projects for the state, three have been approved, Ms Porter said, while the rest “remain as business cases that will likely remain a political talking point”.
The projects that are making it, she added, are not contributing much to job creation, with the Battery of the Nation project, which contributes towards windfarms and solar energy creation, which she believes are not “significant job creators for the long term and the flow on effect to the property market will be minimal”.
The upcoming Badgerys Creek airport and the surrounding aerotropolis is expected to be a significant job creator, Ms Porter said, with industrial, commercial and retail developments expected to funnel through population and income growth.
“Gone are the days where students needed to travel for universities – now these western Sydney hubs are seeing universities anchoring their presence and also partnering with local hospitals to facilitate health and education opportunities in these locations,” she said.
“The health and education boost will see the Nepean Hospital receive a $550 million upgrade, the Campbelltown hospital receive a $632 million upgrade and the University of Wollongong cementing a Liverpool campus.
“The RAAF Heavy Air Lift Group and Australian Army Special Forces will find their home bases here which will increase the presence of defence personnel and their respective families in the region, thus likely to take up available housing stock in the surrounding suburbs.”
Housing price growth however will take some time due to the long-term nature of the project.
“Couple that with the affordability crunch in Sydney holding values back for the next few years, and we expect this project to set up the markets to watch for the next boom in five to seven years being Paramatta and Liverpool as the major players off the back of this new development,” she said.
“This growth could be hindered by federal and state parliamentary plans to reduce the number of overseas migrants arriving into Sydney given 70 per cent of the population growth in Sydney is reported to be from overseas migrants.”
While the $710 million metro light rail project is one that is being watched closely, Ms Porter has doubts about its ability to flow into growth in the property market.
“Whilst Canberra is in need of a good public transport link and this will certainly provide that, there is not a significant number of jobs coming out of this project or population boost to the area,” Ms Porter said.
Instead, investors should be observing the University of Canberra Public Hospital and Defence Academy, as she said both are expected to boost both the local economy and population growth.
The $16 billion North East Link railway project is expected to allievate some congestion issues, but Ms Porter said it “certainly won’t be a game changer for the residential real estate market”.
“This is the same with the Melbourne rail infrastructure, whilst the area is set to benefit from the other improvements such as the Ring Rail, which will provide Melbournians with a second metro line, this isn’t the catalyst for housing growth in the immediate future.”