New infrastructure projects in an area can kickstart a sluggish property market and drive prices higher.
They can transform the desirability of an area, bringing an influx of people who want to be close to shopping centres, train stations and job opportunities.
And a wave of extra buyers and renters generally means an upswing in property prices, according to Hotspotting founder Terry Ryder.
By keeping an eye on where these projects are coming up, buyers can get in early and take advantage of the price growth.
Mr Ryder said transport infrastructure was the main factor that drove prices higher.
A relatively small investment in transport could have a bigger impact than other more expensive projects, Mr Ryder said.
Public transport links and freeways unlocked inaccessible pockets of the city and shortened lengthy commutes.
There is no shortage of transport projects under way in Melbourne, with train station upgrades, freeway expansions and the East West Link project all promising to improve access to hubs outside the CBD.
Paul Osborne, founder of buyers’ advocacy Secret Agent, said owner-occupiers would prioritise different surroundings than investors.
“If somebody is buying a home, what they’re buying is their own environment or habitat,” Mr Osborne said.
Different types of infrastructure, such as green spaces and school zones, became much more important for them, he said.
“It might be harder to quantify visual things, but they really make a difference,” Mr Osborne said.
Mr Ryder honed in on Casey and Sunshine as hot spots for future capital growth. Both are relatively affordable property markets, with projects such as the $880 million reconstruction of Sunshine train station and the expansion of Monash University’s Berwick campus heralding an increase in housing demand.
“We tend to regard that as the power combination — jobs plus affordability plus infrastructure,” Mr Ryder said.
“We find that over the long term, the best capital growth rates tend to be in cheaper areas because that’s where the mass demand goes.”
Activity is already brewing in Sunshine, where the median house price jumped 23.2 per cent in the June quarter from $500,000 to $539,000, according to Real Estate Institute of Victoria figures.
Barry Plant Sunshine director Jason Allen said investors and owner-occupiers were flooding into the area.
“People have taken stock that there’s a lot of money being invested here,” Mr Allen said.
The spend on the train station had been a large drawcard, but buyers were also coming to Sunshine after being outpriced in the inner suburbs, he said.
In the eastern suburbs, Ringwood has emerged as a site for change. The State Government has designated Ringwood as one of Melbourne’s seven “Central Activities Areas” to become a hub for future employment and public investment.
A $575 million expansion of the Eastland shopping centre and a $66 million upgrade of the Ringwood train station and bus interchange are two major projects already under way.
Carter Ringwood agent David Green said: “While there was nothing happening people weren’t investing. Now work has started, the floodgates are open.”
Part of the capital growth was likely to occur while projects were still under construction, Mr Carter said.
There has been a flurry of interest in development sites surrounding the shopping centre, with a crop of new apartment buildings set to hit the skyline.
Mr Carter sold a 919sq m block at 8 Bourke St — 150m from Eastland — for $1.705 million in July, smashing the reserve price by $705,000.
“The buyer owned some adjoining land, so they were prepared to pay a price others wouldn’t,” he said.
The improvement in Frankston’s property market since EastLink opened provides some insight to the extent infrastructure can impact prices.
Hocking Stuart Frankston director Adrian Foster said the market was thriving. There had been two stages to the rise in real estate activity, first when the project was announced and now that people could see the benefits.
“It gives you an amazing run down to the peninsula for weekend activities and also a quick drive to the city.”
When John and Sabrina Putmandecided to downsize, it was to achieve a better lifestyle.
An apartment on Bourke St, Ringwood — a hop, skip and a jump from the expanding Eastland shopping centre and the train station — offered the right mix of convenience and investment potential.
“I think Ringwood in the next two to three years is really going to kick on,” Mr Putman said.
“It’s very cosmopolitan and it’s going to be a great investment.”
He said the easy access from other parts of the city made Ringwood the popular choice for shopping in the eastern suburbs.
“It’s that little bit harder to get out to Knox,” he said.
“Then there’s Doncaster, where you can’t get a parking spot.
“That’s why so many people are coming out here.”
Having EastLink close by for a quick commute to the city or his work in Dandenong South was another selling point.
“There’s just one set of lights then I’m on the freeway,” Mr Putman said.
“We’ve got everything we need, like we’re living in the inner suburbs.”
WHEN TOO CLOSE IS NO COMFORT
BEING close to infrastructure is a drawcard, but there’s a danger in being too close.
Properties that face a main road, major intersection or train tracks can have noise, privacy and security concerns.
Paul Osborne, founder of buyers’ advocacy Secret Agent, said people generally paid 10-15 per cent less for properties in those positions.
He gave the recent sale of 31 Cromwell Rd, South Yarra, as an example.
The four-bedroom terrace house, set metres from the train tracks, sold for $1.53 million in May.
“It should probably be worth another $1 million on top of that,” Mr Osborne said.
Flight paths, cemeteries and uncertainty about future projects could also cause prices to drop, he said.
And while investors were generally less picky than owner-occupiers, that could raise problems in the future.
“Some investors are more likely to go for things like main roads,” Mr Osborne said.
“But that’s probably the last thing they should do. When you buy a property, you’ve always got to think about when it’s time to sell.”
Hotspotting founder Terry Ryder said there was an ideal proximity range — within walking distance but outside noise concerns.
“The ideal would be about a kilometre from a train station,” Mr Ryder said.
Original article published at www.news.com.au by Nicole Engwirda, The Herald Sun Real Estate 18/8/2014