Expert Bust #14 - Infrastructure Influence

I had a client who was planning to buy in a suburb where a new business park would create 500 jobs.



I calculated the population within a 40-minute commute. I then estimated the unemployment rate for that area.

There were literally thousands of potential job applicants who had no incentive to move one inch. And if they did move, they had a choice of at least half a dozen suburbs right next door to this new business centre.

Back in the resources boom there were plans to spend $90 billion on infrastructure in Gladstone, a city with a population of only 30k. You'd think that's a big enough project to drive demand. But because every developer and their 'cus new about it, there was over-supply and prices actually tanked despite the projects going ahead.



Over the last decade I've noticed that many of the best growth markets had nothing going on, no infrastructure driving demand. Infrastructure research has been largely underwhelming.

Small infrastructure projects aren't enough to shift the needle and big ones are too well-known to escape the attention of developers. Badgery's Creek is a good example - loads of vacant land being developed and promoted.

If an infrastructure project is going to impact prices, it will start to show up in supply and demand metrics. So, now days I don't even bother researching infrastructure projects.

 

I would say a major transportation project would significantly influence the house prices. But there are NOT many of them going around.

Sydney Metro northwest is a prime example. The entire Hills district has benefited significantly in terms of house prices. But they key thing was that the Hills district is already established before the metro was built, so that there are not many supply of stocks.

For Badgery's Creek airport, I am not so sure. Sure that will be jobs created but as you say that there are tons of land to be developed.

 

So there was no uplift in the Hills eg Tallawong, Erskine Park, Schofields etc. No land out there either.

No transport links happening either - Northconnex, M4 & M8 all recently completed, M4 east, Kingsford/Kensington light rail, conversion of Bankstown line to Metro, Parramatta & Bays Precincts Metro, Chatswood to CBD Metro extension, northern beaches link. There's also a new freeway to Badgerys Creek & rail line, inland rail (Melbourne to Brisbane).