NSW impact on land prices in established suburbs when new suburbs are built next to them?

What do think of the impact on land prices in established suburbs when new suburbs are built next to them?


To be more specific, Hassall Grove NSW 2761 is a suburb built in the early 1980s, but its neighboring suburb to the north, Marsden Park NSW 2765, is experiencing a lot of Commercial and Residential development. In the past 3-4 years, Bunnings, IKEA, Cotsco, Starbucks, Woolworths and many more retailers have open new establishments and Stockland and other residential developers are building “master” communities in the area. Is this development positive or negative for the older suburb?


Having such a variety of retailers, services and facilities around increase the livability of the whole area, including the older suburbs, but I guess people will prefer to live in the newer area so rents might come down. However, I am not clear on the impact in land prices in the older suburb. What are your thoughts?

Regards,
Roberto.

 

Hi Roberto,

Looking at the change in median land values (from the NSW Valuer General) for all houses in Hassall Grove, Shalvey, Willmot & Bidwill (which border Marsden Park to the south), I can see that there has been about 31% capital growth in the last 4 years. These suburbs have been fully built-out for a number of years now. But suburbs to the East, West and North of Marsden Park are still full of large subdividable blocks worth over a mil.

Suburbs much further south (Oxley Park, Mount Druitt and Rooty Hill) have had about 33% growth in land values over the same period. They are a sufficient distance from Marsden Park to suggest no influence from the stores and vacant land.

Riverstone is another suburb neighbouring Marsden Park but to the East. It had 20% growth in land values over the same period. Marsden Park itself has had growth of 26% in land values for the same period.

I think having stores like Bunnings, IKEA, Cotsco, Starbucks and Woolworths nearby is somewhat of a drawcard. But having the massive over-supply totally counters it. And the data supports this.

BTW there's so much more land that can be developed. Marsden Park could be an over-supply black hole for more than a decade if developers are given the green light to go berserk.