A healthy driver of growth

Wednesday, 3rd Jul 2013
Categories: Market News, Newsletter


It is estimated that around $5 billion will be invested in health care building projects in Perth over the next five years, but how will these significant projects affect the local property market?

Hospitals are rarely far from the news and it’s no wonder given the critical role they play in modern society. In Perth, much of the recent talk has surrounded the various major hospital projects that are planned or already underway.

A key question for property investors is how will these significant projects affect the local property markets? There will undoubtedly be both positive and negative consequences.

A quick summary

Let’s start by summarising the major hospital projects in Perth:

Fiona Stanley Hospital

The flagship project of the city is the $2 billion Fiona Stanley Hospital in Murdoch, which will be the state’s most sophisticated health facility. The hospital is one of the biggest infrastructure projects in WA history and is scheduled to open in October 2014.

New Children’s Hospital

A project that has seen its fair share of media scrutiny is the new children’s hospital, which will replace Princess Margaret Hospital for Children. Construction for this project began in January 2012 on the Queen Elizabeth II Medical Centre site in Nedlands and is due for completion in 2015.

Expansion of Joondalup Health Campus

The Joondalup Health Campus, the largest health care facility in Perth’s northern suburbs, has recently undergone an expansion and redevelopment worth around $393 million, delivering extensive new facilities and expanded services for public and private patients.

Midland Hospital

The new Midland Public Hospital, scheduled to open in 2015, will be the first new hospital in the area in more than 50 years and construction is already underway. The new facility will replace the existing Swan District Hospital, providing new and expanded services and a 50 per greater capacity.

Jobs, jobs, and more jobs

Hospital projects often involve enormous amounts of construction and therefore generate large numbers of construction related jobs, which can last many years.

But even after construction has finished, hospitals still require many permanent and part-time jobs making them a major local employer. It’s not just the obvious medical jobs required, such as doctors and nurses, but also positions in areas such as administration, cleaning, IT, security, accounts, legal, marketing, and HR. Jobs attract people and naturally increase the demand for housing.

Economic activity

The economic impact of a new hospital extends beyond the hospital itself. With its large workforce and ability to attract people from a wide area, a hospital can have a tremendous impact on the community in which it is located. It can spawn a variety of other businesses servicing the local population, from non-hospital medical services to cafes.

This increased economic activity not only injects life into an area and makes it more appealing, but it also creates even more jobs. A new hospital can also trigger new transport infrastructure, a further boost for the area.

The local property market

How does a new hospital impact on the local property market? Firstly, it could increase the demand for housing in the area, both from people who work at the hospital during or post construction, and from people who value living close to medical facilities.

New research has found that health infrastructure is a key driver of where Australians will choose to live, surpassing employment as the most essential consideration.

In a survey of more than 1,000 people by MWH Global, respondents were asked ‘Which of the following would improve the quality of your life if they were in closer proximity to you?’ The option ‘Better access to hospital/specialist medical care/24-hour medical care’ was chosen by 53 per cent of respondents.

The extra demand for housing triggered by a new hospital could put upward pressure on rents and property prices in the surrounding areas. And these areas should continue to experience the benefit of increased demand well into the future, fundamentally shifting the nature of the local market.

Any risks?

With the amount of people coming in and out of a hospital, there is a risk that increased road traffic could affect some properties in the immediate area. Previously quiet areas could suddenly experience more noise and congestion, devaluing properties.

Hospitals by their very nature can attract a certain degree of anti-social behaviour, which can spill out into local areas. This is especially true for hospitals in inner-city locations that report high incidents of drunkenness and violent conduct.

Could a new hospital encourage new housing developments that flood the market? While developers may be encouraged to build apartment complexes and other housing to cater to hospital staff, limited land supply often curtails the amount of development that is possible.

Is there a risk that a hospital closes down? Given the significant investment that goes into a new hospital and the vital services it provides, it’s unlikely that one would suddenly close down. But over many years, it’s possible that a hospital could scale back or move to another location. If this happened, there could be negative consequences for the local area.


A new hospital can certainly change the economic landscape of an area and therefore have a significant impact on the local property market. Buying close to the site of a future hospital can prove to be a wise investment, especially in the parts that will have good transport links, but the risks need to be carefully evaluated.