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When do properties actually benefit from infrastructure?

When do properties actually benefit from infrastructure?

by Sasha Karen | May 16, 2019 | 1 minute read

Following infrastructure projects is important for tracking property prices in a given suburb, but when exactly do property prices see the benefits of these projects? We speak with a property expert to find out.

Building construction
May 16, 2019

The announcement of upgrading a new road, the construction of a new school or shopping centre or the development of a new public transport system can all funnel through back to surrounding property prices in a given area, and it’s one question that Cameron Kusher, research analyst at CoreLogic, has seen many times.

“We’ve done a bit of a look at some other infrastructure projects around the country, and typically, what weve found is that when its announced, theres obviously interest and an area grows. But once its really set and ready to go, thats when you start to see more people coming in and being attracted to that local area, because of that piece of infrastructure coming in,” Mr Kusher told Smart Property Investment.

“I remember looking in the past when theyve done the M1 in Brisbane and when theyve done infrastructure projects in Victoria, you tend to find its between when its announced and when its concrete and ready to go that you see the interest lift.”

While the finalisation of a project means that piece of infrastructure can actually be used, in terms of property prices, Mr Kusher said the impact has been felt a while ago.

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“Most of these projects, people know about, at the very latest, as theyre being constructed, so I think you would typically find at completion is the benefit of thats already been realised in prices,” he said

“Certainly, its better to get into these areas earlier rather than later where theres a new piece of infrastructure happening.”

As for the interim period when the project is under construction, location is important.

“Ideally, you dont want to be right on a piece of infrastructure,” Mr Kusher said.

“If its a train station, you want to be within comfortable walking distance of it. If its a bus way, you want to be in comfortable walking distance to it, so if its a freeway, you want to be close enough to it that you can get the benefit of it but you dont want to be too close that you get the noise.

“There is that fine line. You dont want to be right on that piece of infrastructure. You want to be around it without being too close.”

However, Simon Pressley of Propertyology mentioned that the influence of infrastructure projects alone on property markets has been overstated.

“It just highlights that there are about 20 major factors that influence a city’s property market, and it’s amateurish for anyone to assume one thing (such as a new hospital or train line) will produce real estate riches,” Mr Pressley said.

That being said, infrastructure projects have a larger impact on property markets in regional areas rather than those in a large city.

“For example, several major projects in locations like Port Hedland and Karratha drove their property prices from 2000 to 2013 to a level that made them Australia’s highest median house price,” Mr Pressley said.

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