Which Infrastructure Projects Will Affect House Prices?

It seems like people think any infrastructure projects will make a big difference to house prices, e.g Queens Wharf Brisbane, Melbourne to Geelong Rail. But what ones will have a big impact? Is a 15 minute shorter train trip going to have that much of an impact?

 

I'd say the vast majority are positive (except for ones which actively make a place worse to live - e.g. a motorway right next to an existing house).

Let's say suburb X and suburb Y are next to each other and the houses have a similar median. Suburb X gets a new train station upgrade and because of it, the median rises around $200,000. Suburb X is now $900,000 median and Suburb Y is $700,000. People will think, I might as well buy in Suburb Y if it's $200,000 cheaper. So Suburb Y then begins to grow too. So major, positive infrastructure projects have an effect not only on the location where they primarily benefit, but also the surrounds whether it's just because of the increased cost leading to purchasers option for alternatives or of course the impact of the infrastructure itself.

Infrastructure projects generally are positive too, because it's a socialised investment which benefits your privately owned asset. Obviously local, state and federal governments spend plenty of money everywhere, but if an infrastructure project commences near your property, for that one project you're at least getting everyone in your specific government area helping subsidise that project. So you're reaping the benefits of government spending that is funded by other rate/taxpayers.

For reference, yes a 15 minute shorter train trip is desirable. Proximity to amenities/work is one of the biggest drivers of demand in a suburb - the closer you are (not only physically but also by commute) is a huge difference. Let's take a person who earns $40 an hour who saves 15 minutes on their commute, each way, 5 days a week. That's 30 mins a day, 2 1/2 hours a week. In wage terms, that's $100. Over a year, that's $5,200 and over a 30 year loan, that's $156,000.

So is a property $156,000 more valuable to the person earning $40 p/h? No, that's now how property prices work, but it helps put in perspective what saving time commuting can be broken down to in a financial sense. I would be willing to pay extra in rent/mortgage repayments to be a lot closer to where I need to be daily/regularly.

 

Whilst what @LP7 says is correct, I also take a most simplistic view.

There are people that would never live 1hr away from work, but would happily cop a 45min commute.

Therefore the more people that are in your pool to buy increase the supply/demand equation and therefore, prices must go up

 

OK so seems rail has the biggest impact? In that case the Melb to Geelong upgrade should have a large impact on prices?